A loan is an operation based on a concluded contract involving the transfer of a certain amount of money or other items to the property of the borrower, who undertakes to return the same amount of money or the same amount of items that he was granted in a given time. If the repayment date has not been included in the contract, it is assumed that the borrower is required to repay the loan within six weeks after the termination of the contract by the lender. The loan agreement may be concluded in oral, written or notarial deed.
Loan and credit
Very often these terms are confused or used interchangeably, which is a mistake. First of all, in the case of a loan, the subject of the contract may be things, not just money, as in the case of a loan. In addition, the loan may be granted for a fee or free of charge for an unspecified purpose. On the other hand, the loan is always paid for in the form of interest and is granted only for a specific purpose. It is also worth mentioning that taking out a loan involves less formalities than when using a loan.
Types of loans
Loans are divided mainly into:
- bank – as the name says, these loans are granted by banks, the subject of the loan can only be money, and the borrower in this case in addition to the borrowed amount is also required to repay the agreed interest. The provisions of the banking law apply to such loans.
- consumer – granted by individuals, non-bank institutions or parabanks. In the case of natural persons, other things may be the subject of the loan. The basic documents regulating consumer loans are the Civil Code and the Consumer Credit Act.
In both types of loans we have a choice of specific financial products that are divided into terms of the borrowed amount, the repayment period or the way the contract is concluded (in person at the outlet or online), etc. The most popular financial products include:
- cash loans – consisting in making available by the lender to a certain amount of money to the borrower for a specified period of time (short-term or long-term loan).
- micro-loans – In the case of non-bank institutions, these are low-value loans, usually short-term, without any formalities. They can also be used by people in debt or without creditworthiness. However, if a bank grants this type of loan, it is offered for purposes related to starting and developing a business.
- secured loans – the borrower is given a given sum of money, but he pledges some valuable thing which, if not repaid, will become the property of the lender. In the case of bank loans, this rule applies to mortgage loans. However, in the case of loans granted by non-bank institutions, a car, jewelry or securities may also be pledged.
- consolidation loans – they convert other, earlier liabilities into a loan, which is repaid on new, defined terms.
- social loans – a type of private loan, which can be granted by any natural person, also without business activity.