The first institution that we associate with borrowing money is the bank. If we listen to the emotional reactions of the media to what they do, parabanks, we can come to the conclusion that only banks can legally grant loans. This is the wrong conclusion. Who else can lend money to others in Poland?
This may be a big surprise for some, but anyone can give loans to Poland. As long as he owns the cash borrowed. It doesn’t have to be a bank, it doesn’t even have to be a company – loans can also be granted to private individuals.
It is worth looking at how lending is regulated by law. Well, the basis of this activity is four short articles in the Civil Code. In addition, there are several other legal acts that regulate lending activity in its various manifestations.
The most important of them is the Consumer Credit Act of 2011, which refers to loans granted as part of business activities and includes, among other banks, cooperative credit and savings banks and the so-called parabanks and banking law.
Who can grant a loan?
Everyone can make loans, but not everyone does. A market has emerged around this service, which has been dominated by several types of institutions:
- commercial banks,
- cooperative banks,
- cooperative savings and credit unions,
- loan companies (so-called parabanks, e.g. Provident but also much smaller, local players),
- employee loan unions in larger companies and institutions (especially state-owned),
- social lending portals
In addition, loans can be granted by private individuals who do not run a business. We can borrow from family, friends, and strangers. It also works the other way – we have the right to grant loans to others or to set up a business that specializes in lending cash to others.
Granting a loan – what to remember?
However, it is worth remembering several important issues:
1. A loan agreement of up to USD 500 may be concluded orally, above this amount a written or electronic contract is recommended,
2. Polish law limits the amount of interest that may be charged to the borrower – for all types of loans and credits it is four times the Lombard rate set by the Good Finance (currently 18% per annum),
3. While there is a very precisely defined concept of maximum interest, the law leaves much more room for maneuver when it comes to other fees related to e.g. granting a loan or extending its repayment date – it is worth remembering this, regardless of which side of the contract we are found
4. If the loan is granted as part of a business, it is subject to the Consumer Credit Act, which imposes a number of obligations on the company, e.g. the need to inform the borrower of all costs of the loan, including the actual annual interest rate,
From the client’s point of view, the lender’s security and credibility are also very important.
Banks and credit unions are under closer state supervision than other lending companies – they are more stable, they are less likely to abuse and it is easier to collect any liabilities from them.
Their disadvantage for some customers may be very rigid procedures (e.g. related to the assessment of creditworthiness).
Social loans – is it worth it?
An interesting phenomenon in this market is definitely social loans (e.g. Coconut) – it is an offer for those who need cash as well as for those who have excess cash and are looking for an unusual way to invest surpluses.
Technical and legal matters are taken over by the intermediary portal in granting social loans.
Either way, if we want to borrow money, we are not condemned to offer banks. He is certainly a large and important player on this market, but apart from him, there are several other institutions and many private individuals ready to lend us cash in exchange for fees and interest.