We take car loans and cash loans without specifying a specific purpose. It often makes no difference to us whether we receive money from a bank, a savings bank, a loan company or a private individual.
Most often, we focus on our goal: that is, receiving money! However, the differences between the loan and the loan are significant! What? About it below!
What is a loan?
A loan is a type of financing that can only be given to you by a bank or credit unions, i.e. institutions that are under the supervision of the Polish Financial Supervision Authority. Before you get it, you need to say why you want to borrow money (you probably know that among bank products you can find mortgages, car loans or consolidation loans) and pass a positive verification of your creditworthiness .
The next step is signing the loan agreement – don’t move without it. What’s in it? Always five basic information. This means: the amount of the loan, time and rules of repayment, as well as the interest rate and commission.
All the issues described above are regulated by several documents. First of all, the Banking Act and other legal acts that already refer directly to individual types of loans, e.g. for mortgage loans it will be the Act on Land and Mortgage Registers and Mortgage. Secondly, the Consumer Credit Act of 2011 and the Anti-usury Act of 2015, thirdly the Civil Code .
It’s worth knowing: Not all financing provided by the bank will be a loan within the meaning of the Banking Law. How it’s possible? And so that, for example, a revolving loan in the account will not be a loan under the law. The revolving loan agreement does not specify the purpose, amount of monthly installments or a specific repayment date.
What is a loan ?
A loan is a type of financing that can be given to you by a bank, credit unions, a non-bank company or a private individual. To receive it, you do not have to reveal why you need the money borrowed – the borrower cannot ask about the purpose of the loan. What’s more, if you want to borrow up to PLN 500, you don’t even have to sign a loan agreement ! If you want to borrow more, you have to, but what will be in such an agreement is no longer strictly defined, because it is neither regulated by the Banking Act nor supervised by the PFSA.
The rules for granting loans are regulated only by the Civil Code , the Consumer Credit Act and the Anti-usury Act .
It is worth knowing: Under the loan, we can borrow not only money, but also securities or other material things. This is not possible for loans – here you can only apply for money as part of your financial support.
Credit and loan – what are the differences
The loan is more flexible and available, but with fewer regulations: more risky. Credit is a less flexible and available form of financing, but due to a larger number of regulations: more secure.
What makes them different? First, they have a different purpose. The loan can be used for any purpose, and the loan for the purpose indicated in the loan agreement. Secondly, the parties to the contract differ them. You can only get a loan from a bank or credit unions, and a loan company or a private individual.
Third, regulations differ. The loans are neither subject to the Banking Act nor to the Polish Financial Supervision Authority. Fourth, they differ in availability. Credit granting is preceded by a thorough analysis of creditworthiness, and in the case of loans the analysis is superficial and sometimes none.
I hope that our text allowed you to understand the basic differences between a loan and a loan. However, if you still have any doubts about any of these forms of financing, please let me know in the comment.