The loan agreement is one of the most important documents that every borrower should read before taking out a loan. According to the definition, it is a letter that requires one of the entities to grant a certain amount of money for a specified period of time to the other party. In addition, it must contain provisions to protect both clients against undesirable effects. In practice, however, it can be different and not always constructed to the benefit of the customer. Check the most important elements that should be included in the loan agreement.
What should the online loan agreement contain?
Each loan agreement should contain certain elements that guarantee both the lender and the borrower the security of the transaction. Please note whether the document, in addition to standard elements, such as the parties to the contract, i.e. the lender and borrower, the exact description of the subject of the contract, duration and signatures also contains
- Loan costs, which are regulated by the anti-usury act. Non-interest charges may not exceed 25% of the sum borrowed and 30% of this amount on an annual basis. Interest is also subject to regulations, which may amount to a maximum of four times the capital granted. Currently it is 10% (as of January 17, 2019),
- The rules, form and date of repayment of the loan,
- Provisions regarding early repayment of the liability – is it possible to recover costs for a further loan period,
- Information on possible loan extension or refinancing,
- The consequences of late repayment – the borrower may be charged with any costs resulting from the creditor’s attempt to regain ownership. They also include default interest, which may not exceed twice the maximum statutory interest for delay, i.e. currently 14% (as at 17/01/2019),
- Conditions for withdrawing from the contract – in accordance with the provisions of the Consumer Credit Act Article 53, we have the option of doing so within 14 days of the date of the contract. The consequence of this is immediate repayment of the loan within 30 days of completing the relevant formalities. The contract should also contain the appropriate template.
- Complaint conditions and the option to terminate the contract.
Below we present detailed information on several of the above elements and tips on what to look for when signing a document.
Online loan and law
We should remember that all financial support provided by loan companies is subject to the provisions contained in the Consumer Credit Act (Journal of Laws of 2011, No. 126, item 715, as amended). This is where we will find information on, among others, the applicable maximum non-interest costs or the consequences of late repayment. If an institution does not comply with the provisions of the above-mentioned document, we should give up its services. This will save us not only time, but probably also money. It is also worth checking whether the lender is on the list of lending companies of the Polish Financial Supervision Authority. If so, we can be calm. The Consumer Credit Act imposes on non-bank financial institutions the obligation to include on their pages not only information on the total cost of the liability, a representative example, but also a framework agreement document, i.e. a template loan agreement. Thanks to this, we can read its expected content before signing the final document.
First of all, the parties to the loan agreement
The loan agreement must include two parties to the agreement, i.e. the customer referred to as the borrower and the financial entity – the loan company, bank or other natural person – called the lender. The document should be constructed in such a way that it can be clearly defined who performs the given function. This means that the contract will require the full name and other details of the loan company. Let’s pay special attention to the address of the lender’s registered office, share capital and check the correctness of the National Court Register, REGON and NIP numbers.
In many cases, our meticulousness becomes a safety buffer. Therefore, let’s take the time to analyze the credibility of the lender.
In most cases, we will not have a problem verifying the information provided in the contract, as they are generally available. Therefore, a thorough check of the above-mentioned data applies especially to situations when we apply for financial support in a little-known company that we do not trust too much. When looking for data on the lender, it’s important to remember that some entities remain part of a larger financial group. So we shouldn’t panic when we see a different company name than the one we expected. Let’s just do some additional research. If the result is finding information confirming these assumptions, there is no reason to worry. Otherwise, you should opt out of cooperation with the lender or contact Customer Service to resolve your doubts.
What is the loan agreement about?
Simply put, a loan agreement is about granting a borrower a specified sum of money for a set amount of time by another entity. Yes, but in addition to the information about the pages signing the document, it should contain several other equally important elements. Particular attention should be paid to the fact that the documents contain information on the exact amount that the borrower will receive. This will allow us to avoid additional hassles or understatements. In addition, it is important to take into account the repayment time and form of refund. If it is to be in the form of installments, the contract should include an attachment in the form of a payment schedule. When applying for non-bank loans, the following distinction is usually made between the dates of financial obligations granted:
a) online payday loans – rules and time limit for return
According to the definition, they should be granted for a maximum period of 30 days. However, some companies offer flexible repayment terms in response to consumer needs, extending the repayment time to up to 60 days. In the case of short-term liabilities, we should make sure that the content of the contract contains a provision about the final date in which the financial liability should be repaid. If we chose a loan period of 45 days, it’s not enough to include this information. A specific date must be given.
The lender is also obliged to provide the client with the cost of payday cash dependent on the repayment time. If we decide to take advantage of the exceptional conditions of the APRC 0%, the document should include an appropriate provision on this subject. When we apply for financial support again or if the lender does not anticipate promotion, it is necessary to include it in the document. This means that when applying for PLN 500 for 15 days, we will have to pay back PLN 600, i.e. a loan with commission, interest and other fees.
b) installment loans via the Internet – rules and time limit for repaying the loan
Installment loans are characterized by longer repayment terms from 3 to 48 months and higher amounts than those offered under payday loans. As the name suggests, we make a refund in installments. If we decide on a loan period of 24 months, it will be necessary to make 24 equal regular payments to the lender’s account. With this type of commitments granted for several or several months, the company is required to specify repayment dates for individual installments, including their amount. Regardless of whether subsequent payments amount to the same amount or another.
It is a good practice for financial companies to add a loan repayment schedule to the contract. Such a document contains the amount of each payment that the consumer must make and the exact maturity date. In order not to forget about paying off the loan and not to mistake the amount of fees, you can also use the option of setting up automatic transfers in our bank account or customer panel. We have a guarantee that we will not forget to pay the liabilities and thus avoid the consequences of late repayment of the loan.
Loan agreement via the Internet and its template
The model loan agreement should also specify the path for the lender to transfer funds. By completing the online application, the customer specifies how to receive the money, which should agree with what the contract contains. If you choose the option to pay with a GIRO check, the lender cannot enter in the contract that the money will be transferred via bank transfer. Fortunately, such situations are very rare, because companies care about impeccable reputation. So they make every effort to ensure that the loan granting process takes place smoothly and without any accusations.
It is also worth paying attention to the time of making the transfer. Usually, when applying for an online loan, we expect the lender to respond quickly. However, it happens that on the website we find assurances about the delivery of money within 15 minutes of the decision, which is not confirmed by the contract. If the lender reserves the right to complete the transaction within 24 hours in the document, we should respond. Of course, this is the most permitted and common practice. However, when signing such a contract, we cannot blame the company for the waiting time for the transfer.