Credit and loan – find out the differences

A loan is a banking product that is governed by the legal provisions contained in the Banking Law. There are several types of credit that differ from each other for the purpose of the loan, sometimes for paying the installments, and for the maximum amount of liability granted. The loan, in turn, is a non-bank product granted, among others by loan companies. There are short-term and installment loans. What is the difference between financial products in the form of credit and loans?

Credit and loan – differences in legal classification

Credit and loan - differences in legal classification

The terms of the loan granted by the bank are specified in the loan agreement. The non-bank product in the form of a loan is in turn specified in the loan agreement.

Credit and loan are two completely separate concepts. The first product is granted by banks, and its basis is determined by the provisions of the Banking Law. The loan, in turn, is a non-bank product granted, among others by loan companies. The rules for granting loans are governed by the Civil Code.

What is a loan?

What is a loan?

A non-bank loan is a form of financial liability that can be granted by both a loan company and a natural person. The terms of the loan agreement are governed by the Civil Code. In Article 720 § 1 of the Civil Code, we can read: and same quality. “

One should know that a non-bank loan, i.e. a car loan, is concluded on the basis of a loan agreement by two parties: the lender and the borrower. What elements should be included in the loan agreement? Below are the most important of them:

  • subject contract description,
  • duration of the loan agreement,
  • financial liability costs,
  • loan repayment principles and dates,
  • consequences of late payment.

Importantly, when applying for a non-bank loan, you do not need to specify the purpose for which you want to use the money you borrowed. In addition, we offer free loans that do not include additional costs in the offers of many loan companies. It is also worth emphasizing that in the case of this type of financial product the collateral may be:

  • guarantee,
  • bill of exchange,
  • pledge,
  • voluntary submission to enforcement.

A non-bank loan is a financial product that is much easier to obtain than a loan. Loan companies grant loans even to people with debts. It is enough for them to have income enabling them to repay the loan or guarantor they have taken out.

Types of loans – what do loan companies offer?

Loan companies are becoming increasingly popular on the financial sector market. They offer online loans that are characterized by:

  • quick decision on granting a financial product,
  • no complicated formalities,
  • quick money transfer to the customer’s account.

What types of loans do non-bank institutions offer?

  • The first is a short-term loan, the so-called payday loan – a loan for a small amount, which is usually repaid in a short period of up to 30, 60 or 90 days.
  • The second is an installment loan – it can be taken for a much larger amount than a payday loan. The installment loan repayment period is a maximum of 48 months.
  • The third type is a home loan, which customers of loan companies can apply online or by phone. A representative of the non-bank institution delivers the cash along with the loan agreement to the borrower’s home.
  • Business loans are another type of financial product. Entrepreneurs can apply for up to several hundred thousand zlotys.
  • Secured loans are a non-bank product that can be a good solution for people without creditworthiness. However, there is a condition – the client must have assets of a certain value that will be a collateral for the loan company.
  • A car loan is another type of non-bank loan, mostly for individuals and business entities.
  • A revolving loan allows the borrower to use the allocated funds multiple times. The loan company customer has a chance to obtain this type of non-bank product in the amount of even several thousand zlotys.
  • Loans for the unemployed and indebted are the next type of non-bank products offered by loan companies. Typically, non-bank institutions require a guarantor from customers here.

It is worth emphasizing that new loan offers appear from time to time on the loan market. This is because consumer needs are constantly changing and loan companies must respond quickly. For this reason, the offerings of some lenders also include, among others: business loans, secured loans, unsecured loans or loans for indebted persons.

What is a loan?

What is a loan?

The loan is a banking product based on a loan agreement. This document is prepared between the bank and the borrower. A loan granted by a banking institution is tantamount to making a specific amount available to the potential client by the bank.

The basic cost associated with the loan is interest. You should also consider other fees, such as:

  • commission for granting a loan,
  • credit insurance,
  • costs of establishing collateral,
  • costs related to the change in the content of the loan agreement.

The grounds for granting the loan are set out in the legal provisions contained in Chapter 5. Cash loans and borrowings as well as the principles of concentration of banking law exposures.

The basis for granting the borrower a certain amount of credit is his creditworthiness. It is possible to repay the funds received on time and on the terms specified in the loan agreement. The borrower is required to submit, at the request of the banking institution, documents and information necessary to assess his creditworthiness.

It is also worth remembering that the bank, when granting the loan, checks the potential customer in the debtors’ bases. Registering in registers is usually tantamount to a negative credit decision of a banking institution.

Types of loans – what financial products do banks provide?

The banks will offer loans that are tailored to even the most demanding financial needs, but you should not forget that obtaining a loan from a bank is subject to meeting certain conditions. In a situation where a person applying for this type of financial product does not meet the imposed requirements, then he will not be able to count on getting them.

Types of loans that banks offer:

  • Cash (consumer) credit – is a financial product that enjoys the greatest popularity among consumers. Not without reason, because such a loan can be used for any purpose that is not related to business.
  • Mortgage – a bank grants such a loan, for example, when the consumer wants to buy a property (e.g. apartment) or build a single-family house. The amount of the mortgage includes very large sums of money. The credit period may last even several dozen years.
  • A consolidation loan – also enjoys considerable borrowers’ interest because it allows you to combine several financial liabilities into one. In this way, our loan installment will decrease significantly.
  • Investment loan – intended for consumers who plan to increase their assets by purchasing e.g. securities.
  • Renewable loan – is a financial product that is associated with a bank account. This is a permanently available credit line. The borrower may use the funds available there for any purpose.

What is the difference between a loan and a loan – summary

What is the difference between a loan and a loan - summary

A loan is a banking product granted for a specific purpose. This type of financial product is regulated by legal provisions contained in the Banking Law. The conditions for granting and repayment of a loan are specified in the loan agreement drawn up between the bank, i.e. the lender and the borrower.

Loans granted by banking institutions are divided into several types, which differ from each other in terms of purpose, term of loan and maximum amount of liability granted. An indispensable element for obtaining a loan is the borrower’s high credit standing.

The loan, in turn, is a non-bank product that the borrower can apply to in a loan company, cooperative savings and credit unions or natural persons. He is not required to specify the purpose of the loan. Granting this type of financial liability is governed by the legal provisions contained in the Civil Code. It is worth remembering that most non-bank institutions grant short-term loans to new customers for free.