Installment loan in a bank or loan company?
A loan can save us when we run out of money for everyday needs, as well as when we need funds for a larger purchase or profitable investment. Regardless of the purpose, loans are becoming more and more popular. But where to go for them – to the bank or to the loan company?
Loans belong to the fastest growing branches of the financial sector in Poland. According to the BIK report, almost every second adult in Poland repays a credit obligation or loan – last year as many as 15.36 million people in our country were active in credit terms. At the same time, we have learned solidity in paying off our obligations – we learn from the report that only 7.9% of borrowers and borrowers are late in paying their installments more than 90 days. Without a doubt, thanks to loans you can quickly finance larger purchases, and save yourself when you run out of money for current expenses. However, the loan market is currently very rich. Both banks and specialized companies offer loans. Let’s check where it is best to take out a loan.
What do we borrow for?
We usually take loans for the purchase of home electronics and appliances, home renovation and car purchase . Generally, the purchase of durable goods, i.e. home appliances, cars etc. is the most common reason for incurring liabilities – invariably for 5 years. About a quarter of loans are intended for such purposes. At the same time, the percentage of households taking out loans to pay off earlier obligations is falling – it is currently 17.5%, and has decreased by 1/3 in the last 10 years. Less than 15% of loans and borrowings are taken out as a result of an emergency – usually money is needed for the costs of treatment, rehabilitation, etc. Less, 12.5% of people take loans for such purposes as a holiday trip or financing the purchase of Christmas presents.
When it comes to serious shopping, such as an apartment or a new car, we decide on loans; we also try to put our savings into this purchase. Besides, loans are usually granted for much smaller amounts than those needed to make more expensive purchases.
Bank loan – how does it work?
Under Polish law, the bank is the only institution that has the right to grant credit. However, banks currently offer their clients not only loans but also loans. What is the difference between these two financial products? Primarily:
- Granting loans is regulated by the Banking Act, while the loan agreement is regulated by the Civil Code. The loan may be granted by both natural and legal persons;
- The borrower in the light of the above legal regulations do not have to specify the purpose for which money is needed. In the case of credit, the purpose of obtaining funds must be specified – the loan is a special purpose agreement and the bank controls what the borrowed money is used for;
- The loan agreement must be concluded in writing. The loan agreement may be verbal, e.g. concluded by telephone.
In short, the loan is much less formal than the loan. Nevertheless, the lending banks have specific rules that may eliminate some potential borrowers. It may – although it does not have to – also extend the loan application review period. In the case of installment loans, just like in the case of loans, purchases in installments or the creation of a credit card, the bank checks the creditworthiness of its client. In the face of a dynamic loan market, banks reduce waiting times by enabling the entire procedure to be carried out online, by phone or at a branch.
The bank may also encourage the borrower with a relatively low real annual interest rate (APRC). Let’s remember, however, that the costs provided as APRC are an annual statement, so in the case of a short-term loan they can be much higher. Secondly, often the low interest rate is “compensated” by loan insurance, which is an additional amount added to each installment.
A loan in a loan company and its advantages
And what is the commitment of a loan company? On the example of a loan taken out at Nick Carter, let’s list the basic advantages of this form of obtaining money:
- the possibility of early repayment on attractive terms – the earlier the liability is repaid, the lower its total cost will be;
- no need to document revenues – this is an important issue, among others for people working on the basis of e.g. work or commission contracts;
- you don’t have to leave the house to get a loan – you can get it online or by phone. The latter option is important for people who do not have internet access. They can apply by phone and withdraw money at the post office via the Giro check;
- the ability to verify your identity online (using a bank account) or offline (via the Giro system, without requiring a bank account – verification by SMS with a code, which should then be shown at the post office when receiving the sum awarded);
- no requirement to set up a bank account or sign a contract for any other banking product;
- speed – money available in a few minutes;
- no hidden fees, such as liability insurance;
- transparent loan granting and verification process;
- the possibility of spreading the loan up to 48 installments – it’s more than banks offer. Thanks to this, we gain easier repayment in the form of regular, small amounts;
- any purpose.
How to choose a loan company?
Let’s remember to borrow wisely. It is not worth choosing the first better company that we know nothing about. It would be good if the selected company was controlled by the Polish Financial Supervision Authority (on the PFSA website you can read a list of companies that are worth trusting). In addition, the company should appear in the National Court Register, have NIP and REGON. The institution’s website should include contact details, including the address of the registered office. It also doesn’t hurt to look for the opinions of other customers about a given company – preferably on a page containing authentic customer recommendations, rather than custom written reviews.
From the practical aspects, it is good to check what documents should be prepared before completing the application (e.g. ID card) and whether we meet the basic formal requirements to enter into a commitment – an appropriate age (sometimes it is over 21 years old, sometimes you must be over 18 years old), no ongoing , unpaid loans and no debts confirmed by an entry in the National Register of Debtors.
Remember to choose only companies that do not hide any components of the cost of the loan. A clear offer is the basic principle of determining the company’s credibility. The APRC should be clearly defined, as should the final repayment amount and the amount of individual installments. Check if the commission is listed and how much it is.
In any case, it is worth checking what solutions a given company presents in the event of delays in repayment of installments. We should remember that it is best to avoid such delays, because they often involve significant costs. If you are concerned that you may not be able to pay the installment on time, it is best to contact the loan company in advance to determine the best course of action. Further help for customers is also an important aspect!
A loan can save us when we are short of cash, whether for current purchases or for sudden and unforeseen expenses related to random events, e.g. covering medical expenses. It is worth remembering here a thoughtful choice of a loan company – let it be an institution that will grant a loan quickly, but at the same time be reliable. Only then will repayment of the loan cause more trouble than the initial lack of cash.