Taking a loan is a serious commitment – we must comply with all the provisions of the contract. The basic principle of responsible lending is not to borrow money “exaggerated”, ie in an amount greater than we need. We also need to define the purpose for which we will allocate the obtained money. The decision to take a loan should be made only when we can no longer postpone payments, when we are not able to finance it with our own funds, and when we are sure that we will be able to pay the loan back at the time chosen by us. We cannot treat loans as a permanent home budget support! If we have doubts whether we will be able to repay the loan, we’d better give up applying for it.
Fees, including APRC
In the case of short-term loans, the following fees may apply: 1) a preparation fee (charged once); 2) an administrative fee (charged monthly); 3) a fee for extending the loan repayment period 4) insurance costs, and – if the loan installments are not repaid in a timely manner – with the costs of admonition and debt collection activities. In the case of loan companies operating via the Internet, we can also deal with the so-called registration fee – it takes the form of transferring a specific amount (e.g. 1 penny) from the borrower’s personal account to the account indicated by the lender. In the case of short-term cash loans, the actual annual interest rate (APRC – total cost of credit borne by the consumer, expressed as a percentage of the total loan amount per annum) is usually much higher than for loans and cash loans from Banks. For example, for a short-term loan of PLN 1,500 for 30 days, the APRC ratio is 218.9%.
Loan renewal rules
The borrower has the option of extending the loan repayment period. The loan repayment period is extended at the client’s request. Usually, the loan can be extended for a maximum period of time for which it was originally granted. The extension of the loan repayment period involves the payment of a fee. Its amount can be the same as the loan fees.
Consequences of late payment
Non-repayment involves additional fees charged to the borrower:
- costs of reminders and requests for payment,
- fees for late repayment (for each day of delay) or insurance costs in this respect,
- interest for delay – if the parties do not agree on their amount, then pursuant to art. 481 § 2 of the Civil Code, the creditor is entitled to statutory interest for delay; their amount is the sum of the equivalent of the NBP reference rate and 5.5 percentage points,
- costs of recovering a loan in court proceedings for a delay of four times the rate of the Lombard loan of the National Bank of Rose.
Consequences of non-payment
If the loan is not repaid within the contractual period, the lender may take action to return the loan. Let us also remember that we always have the option to pay our debts earlier. Loan companies usually do not charge any fees for this, and some of them even pay back part of the commission for granting the loan.