We will discuss the cost of a private loan in more detail in this chapter. The obligation of the Lender in this case, our company as a company, is to enable the client to analyze and view the loan agreement before signing it , as clearly stated in the “Consumer Credit Act”
At the customer’s request, we provide a loan agreement before signing it. In case of necessity and doubts of the client, we discuss the entries with him in a clear and comprehensible way. An additional element that also results from the above-mentioned act is to familiarize the customer with the costs of the loan. In connection with this assumption, each person applying for a loan receives a cost statement. It is included in the loan schedule in the form of a table generated by the system. It is a specially developed program that allows you to avoid errors related to calculations and individual parts of the costs included in the credit offer. Below is an example of the cost of a loan for PLN 30,000 to be paid to a client for a flat located in the city above 30,000. residents eg in Warsaw or Krakow:
The presented cost of a private loan included in the schedule includes statutory interest, which amounts to 10% per annum today. The annual Real Interest Rate (APY) for this example is based on the calculations:
The loan amount – PLN 40,000.00
Commission – 0.00%
Other costs of granting a loan – PLN 10,219.00
Interest rate – 10.00%
Type of installments – equal
Loan period – 12 months
Actual interest rate 90.05%
Due to the lack of verification of creditworthiness and lack of analysis of bik and the lack of certificates of income (these are taken as a statement). The cost of a private loan is higher than in bank loans. This is due to the higher credit risk and also to the client, who is most often a person with other liabilities.
The duration of the contract due to the fact that we are an off-bank institution is a bit shorter than with bank loans. The principle is accepted that the client is unable to repay the loan in the short term. In our contract there is a record from which the customer can use if there is a need. This provision says about the possibility of continuing the loan agreement until the loan is fully repaid. In this way, we do not specify the final date of repayment of the loan, because only from the client will depend on how much it will actually last. One of the ways to significantly shorten the duration of the contract is the repayment of the loan part in addition to the monthly installments. Such a payment can be made at any time, eg at the end of the settlement period before the expiry of 12 months.
A real estate loan is slightly different from bank mortgage contracts due to the fact that banks operate under the Banking Law, which gives them more options and freedom to prepare a contract for the client. Off-bank institutions can not make use of such a right, so each loan agreement is concluded in accordance with the Civil Law. The contract must be signed by all parties to the contract in the presence of a notary public. Thus, the contract is a Notarial Act, which ensures that it has been duly prepared and, most importantly, in accordance with the law and regulations in force in the Act on consumer credit.