Many people use these terms interchangeably. Although both terms involve borrowing, the loan and loan function on a completely different basis. So what are they different? Let’s solve this dilemma once and for all.

Credit – in the bank and on paper

Although the loan in non-bank institutions is often called a working loan, in fact real credit can only be obtained in a bank. It is subject to the provisions of the Banking Law and the Act on consumer credit. While the latter document also regulates the activities of non-banking companies, only banks act on the basis of banking law. Therefore, only they have the full right to grant loans.

The details are important

The aforementioned banking law also regulates in detail the manner in which the loan agreement should be concluded. Well, in order for it to have legal force, it should be made in writing. Furthermore,  it must contain accurate information on the loan amount, its total costs, interest and the amount of the commission. The loan agreement should also include information about the purpose of the loan (except for consumer loans, which are allocated to meet the current needs of the borrower) and the rules for its return in addition to the exact repayment date.

Although we get the loan when we get a loan, we never get our property. All the time they belong to the bank, and we can only dispose of them for the time specified in the contract. Therefore, the bank (as the owner of cash) can control how we use the loan and whether we issue it in accordance with the original purpose.

They will illuminate before they borrow

Although money is not our property, we must pay for their use. Each loan is accordingly interest-bearing, and the bank often earns a huge commission for its granting. What’s more, some banks deduct a commission from the amount of the loan, which ultimately gives the client less, and the initial amount must be paid off anyway. Whether we like it or not, the loan will always cost and we will pay back more than we borrowed.

Before the loan we receive the bank will thoroughly scan our current financial life. We will therefore be checked in the debtors’ databases and asked to show the sources of our remuneration. If we have any debts or no permanent employment, we can say goodbye to the dream of a loan.

Loan – from where you want and without formalities

Loan - from where you want and without formalities

A loan, however, is a concept much wider than a loan. You can get it at the bank, in a non-bank institution, and also get it from other people (so-called natural persons).

In contrast to loans, loans granted by non-bank companies operate exclusively on the basis of the Consumer Credit Act. In the case of loans from natural persons, all legal regulations are specified in the Civil Code.

A loan agreement may be made in writing, but it does not have to. The so-called. the verbal agreement is also binding on loans. However, when it comes to loan companies, they usually write a written loan agreement with their clients. Preparing a contract in writing is also recommended for any other loans over PLN 500. In the case of disputable matters, this contract may constitute a basis for the recovery of its rights.

A free loan exists really!

As you can see in our comparator, more and more non-bank companies provide loans for PLN 0. People who previously used loans often do not believe that they can get cash for free. Meanwhile, it is possible because the loan does not have to be interest-bearing. The one who borrows can set the cost of such a loan, but it does not have to charge a fee for it. It all depends on the conditions that will be agreed with the borrower.

What’s more, in the case of loans, there is no obligation to set a repayment date. Non-bank institutions tend to introduce such a deadline, but in the case of loans in the family you can easily afford to say “you will give up when you can.”

They give and do not ask

Another factor that differentiates a loan from a loan is the intended use of borrowed cash. While in the bank we have to explain why we need extra money, so in the case of a loan is not necessarily. That’s why when we take a minute, nobody will ask us what we want to spend that money on. We can therefore distribute the borrowed money to various needs without having to inform anyone about it.

And finally, in the case of loans, all formalities are kept to a minimum. Lenders often do not require documents such as confirmation of income source. Often, they do not check borrowers in debtors’ registers, and if they do, negative records do not always result in the loan being denied to the client. Borrowing cash in a non-bank institution is so much simpler and faster than taking a loan at a bank.

Do not make mistakes!

Do not make mistakes!

As you can see, credit and loan are governed by completely different laws. Why, then, misidentification of these two products as identical? Most likely, this is due to the fact that banks often offer loans as well as loans, the latter being definitely more popular. It is worth carefully reading the contract and carefully checking what product we are dealing with. Credit and loan have different legal consequences, which is why incorrectly naming these products and ignorance of differences can lead to many unpleasantness, especially when we are unable to pay off the debt on time.

Do you have a problem with repayment of the loan? Check what threatens you!
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