Loan vs. loan: find the difference!

 

Have you ever seen an advertisement for a cash loan from a loan company? No? I will calm you down straight away – this is not a sign of your carelessness, just such an advertisement has never been broadcast, because the loan can only be taken in a bank.

Cash loan only in a bank?

Cash loan only in a bank?

This is the basic difference between these two financial products. We can go for a cash loan almost everywhere – to the bank, SKOK loan company, and even to a natural person, provided that the person has sufficient funds.

Only a bank will grant us a cash loan according to strict rules. This is related to legal regulations. The cash loan is not only subject to the Act of May 12, 2011 on consumer credit, which applies, inter alia, to loans, but also to the provisions of the Banking Law, which in Art. 5 clearly indicates that the loan is a “banking activity”, therefore only banks have the right to grant it.

Cash loan agreement and loan agreement

Cash loan agreement and loan agreement

You’ve probably borrowed money from a friend without signing any contract. And do you imagine that the bank could give you money without signing a relevant document with you? Intuition says no? And rightly so. In accordance with art. 69 of the Banking Law, each loan agreement must be concluded in writing.

For a cash loan agreement to be valid, it must not lack specific information:

  • parties to the contract,
  • loan amount,
  • loan currency,
  • repayment date and terms,
  • credit costs,
  • the purpose for which we borrow money.

Such rigid and formalized rules do not apply to loans. If you want to take a loan up to PLN 500, you can only enter into a verbal agreement. In the case of a higher amount, a written contract should be concluded, but here too strict rules do not apply as in the case of a loan contract.

However, it is worth establishing certain rules and writing them down so that in the event of a dispute, it is easier to decide who is right.

Cash loan for any purpose

Do you want to borrow money but don’t want to say what you spend it on? No problem. Choose a cash loan or a cash loan for any purpose. However, the bank may lower the interest rate on your loan if you plan to buy a house, flat, car or if you want to pay off other loans. The adviser will then offer you a mortgage, car loan or consolidation loan.

Without a written agreement and repayment schedule, the bank will grant you a revolving loan – which means that although the word “loan” appears in the name, it is a classic loan. You can also opt for a credit card – you will sign the contract once and use it when you need it.

Cash loan for zero?

Cash loan for zero?

If you take a loan from a bank, you will have to repay the entire amount borrowed, plus interest and commission for financing, and sometimes insurance costs. Simply put – it means you will have to give back more than you borrowed. This does not mean, however, that you cannot borrow money without incurring any costs. The loan has slightly different rules. Its cost is set by the one who borrows money.

This means that the cost may be much higher than in a bank (this will be the case with standard payday loans), but it may as well be lower, or even not at all. It all depends on what conditions you agree with the lender.

You must be aware that the loan company will want to earn, so the cost will be rather higher than for a bank loan, but today almost every loan company introduces the promotion “first loan for free” to its offer. You can then take a specific amount for a specific period completely free (APRC 0%).

I hope that the words “loan” and “loan” are no longer the same for you. Of course, you do not need to know the exact definitions – for your own private needs, you only need to remember that “credit” is a narrower term than “loan”.

It only covers liabilities incurred in the bank and on certain terms. However, regardless of whether you are applying for a loan or a loan, the most important thing is that you read the contracts carefully, especially those loans that do not have a rigidly defined framework and pay attention to the overall costs of the liabilities incurred.

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