Check what exactly distinguishes payday loan and what profits this kind of lending brings with it!
Payday loan – definition of the concept
Pursuant to the payday loan Act of 12/05/2017, a payday loan is a financial instrument allocated to a consumer by a bank, exclusively for private purposes – that is, those that do not involve business or professional activity . It can be used to finance the purchase of a car or a foreign trip. At the same time, the legal act boldly not only defines the loan definition, but also a number of requirements that every payday loan should meet!
Under the Act, each payday loan:
- It reaches the client, which creditworthiness has been thoroughly examined – it is protection against dishonest lenders and excessive indebtedness,
- It must inform the customer about the Real Interest Rate and the total amount to repay the debt,
- The contract should clearly explain the type of loan – for example, a loan agreement or renewable credit agreement ,
- Specifies the method of paying interest and loan installments and the repayment period of the liability
- It is obliged to include all data on additional credit costs – eg Insurance, commission, payment for processing the application or notary fees,
- It can not exceed twice the NBP reference sum – the maximum loan cost is 10%,
- He must inform about the terms of termination of the contract, as well as the pursuit of his claims from the lender who has not fulfilled his obligations
If any of the concluded contracts does not meet even one of the requirements, it can not function as a legally valid act!
The lender has specific rights and obligations!
The entry into force of the payday loan Act resulted in the establishment of an upper limit for incurring debt, for a maximum amount of PLN 255.550 thousand. zlotys or the equivalent of this amount in foreign currency. However, for a loan to be named consumer, it must meet a number of other requirements to ensure consumer safety.
A payday loan can be concluded only in writing – and on the banking market it can be in the form of:
- Loan agreements,
- A renewable loan application,
- Loan agreement, which is understood within the framework of banking law,
- Credit statements in which the creditor incurs a liability towards a third party – and the consumer undertakes to repay the debt,
- Contracts for postponing the consumer’s repayment date when he undertakes to incur related costs
Payday loan agreement – what rights does the borrower have?
In addition to borrowers’ obligations as to the necessity of accurate information about their product – the Act also distinguishes Consumer rights right after the conclusion of the loan agreement. The most important of them are:
- The right to information and explanations that pertain to the implementation of payday loan ,
- You can get a free loan agreement if you meet the credit terms in the eyes of a bank or credit intermediary,
- The right to obtain at any time a repayment schedule,
- The option to repay the loan in full or in part before the date specified in the contract – in some situations, the lender may charge a commission, but not more than 1 percent. loan
- The right to withdraw from the contract without giving a specific reason, within 14 days of its conclusion – the customer must submit a special declaration of withdrawal from the contract. It does not incur any costs in this respect, with the exception of notarial fees and interest accrued from the date of payment of the loan until its repayment date.
It often happens that many people unknowingly confuse payday loan with a payday loan. And the difference between them is significant. Well – payday loan refers to the person who borrows – and therefore the consumer. On the other hand, payday loan for the purpose of borrowing money – that is, consumption. In this case, you do not have to explain to the bank, which you will use for borrowed money. However, when you take out a loan for a specific “goal” – how to buy a car, the renovation of an apartment is already mentioned here about payday loan.
In addition, payday loan is not legally defined and does not involve the payday loan Act in any way! It is rather a product category – a kind of loan for everyone whose repayment terms are determined individually by financial institutions.