Consumer Credit Act – the most important assumptions and principles for the protection of borrowers

The introduction of the provisions of the Act on consumer credit in Poland, as early as 2011, was a necessity and a consequence of the implementation into the Polish legal order of Directive 2008/48 / EC of the European Parliament and of the Council of April 23, 2008, on consumer credit agreements (Dz. EU Official Journal L Series from 2008 No. 133, p. 66, as amended).

Currently, this Directive has changed, and the Directive of the European Parliament and of the Council 2014/17 / EU of 4 February 2014 on consumer credit agreements related to residential real estate is in force. The directive was issued in order to unify the consumer credit market within the European Union.

Thanks to the Consumer Credit Act, it was possible to increase the legal protection granted to consumers when they incur credit obligations with banks and other types of credit institutions.

Who is affected by the Consumer Credit Act?

Who is affected by the Consumer Credit Act?

We already know what is meant by the concept of the Consumer Credit Act. However, it is worth saying who is affected by the Consumer Credit Act? Its provisions apply to two parties to the loan agreement – borrowers and lenders, but also to loan brokers.

In such a case, the borrower is the consumer, i.e. a person who meets the conditions for being considered a consumer in accordance with the provisions of the Act of 23 April 1964 – Civil Code. Article 22 1 indicates that a consumer is a natural person who performs with the entrepreneur a legal act not related directly to his business or professional activity.

The other party to the contract is the lender, i.e. a bank, cooperative savings and credit union, as well as other financial institutions, including loan companies, and even natural persons conducting business activities.

The lender is simply an entrepreneur within the meaning of the Act of 23 April 1964 – Civil Code, which, in the scope of its business or professional activity, grants or promises to grant credit to a consumer.

The entrepreneur, in turn, is a natural person, a legal person and an organizational unit conducting business or professional activity on its own behalf. There are also credit intermediaries, i.e. entrepreneurs within the meaning of the Civil Code, other than the lender, who in the scope of their business or professional activity obtain financial benefits, including remuneration from the consumer.

They carry out actual or legal activities related to the preparation, offer or conclusion of credit agreements, acting for a fee.

Since when is the Consumer Credit Act in force?

Since when is the Consumer Credit Act in force?

On May 12, 2011, the provisions of the Act on the Consumer Credit Act were adopted. Since when is this act in force? Well, it entered into force on December 18, 2011, and at the same time replaced the Act of July 20, 2001, on consumer credit.

In addition, on March 11, 2016, an amendment to the Consumer Credit Act came into force, which, among others set limits on non-interest loan costs. The modification of its provisions also included a draft amendment to the so-called Anti-usury Act of 2019.

Amendments to the Consumer Credit Act

As we have already mentioned, the first major amendment to the Consumer Credit Act entered into force in 2011. The new act was an implementation of the EU directive. What changes in the Consumer Credit Act came into effect then? This is best shown in the table below:

In 2016, the Consumer Credit Act was amended again. The changes that were introduced then were mainly issues related to the APRC. The new act on consumer credit has been amended in response to the so-called anti-usury act.

At that time, the maximum amount of non-interest loans or credit costs was introduced. They should not exceed:

  • 25% total loan amount (permanent),
  • 30 percent of the total amount of consumer credit per annum (variable part),
  • 100% of the total value of the loan if it is granted for several years.

The maximum fees connected with arrears in the payment of receivables were also limited by law. The highest fee for delay in annual terms may not exceed twice the statutory interest rate.

Along with the amendment to the Act on consumer credit, a Register of Loan Companies was also created, which is supervised by the Polish Financial Supervision Authority. Every legally operating loan company must obtain an entry in such a register.

Main provisions of the Consumer Credit Act

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The most important thing in the Consumer Credit Act is to define what should also be understood by the term “consumer credit”. In connection with applicable regulations, this type of loan is any loan granted in the amount not exceeding USD 255 550 or the equivalent of this amount in a currency other than USD.

Consumer credit should be granted by the lender to the consumer in the scope of conducted business activity. A consumer loan agreement can also be understood as a loan agreement not secured by a mortgage, which is intended for the renovation of a house or apartment in the amount not exceeding USD 255,550.

The Consumer Credit Act includes the main provisions regarding the definition of such loans in the concept of consumer credit. It houses:

  • Loan agreement.
  • Credit agreement within the meaning of the Banking Law.
  • Agreement on deferred to the consumer the date of fulfilling the cash benefit, if he is obliged to bear any costs related to the deferral of the performance of the benefit.
  • Credit agreement, in which the creditor incurs a liability to a third party and the consumer undertakes to return the fulfilled benefit to the creditor.
  • Revolving loan agreement.

A consumer credit agreement should be concluded in writing unless separate provisions provide for a different specific form for such a contract. It should be formulated in a clear and understandable way for each party.

A loan for those in debt without creditworthiness

Loans for those in debt are for people who have or have had in the past, problems with paying their debts. Check if you have a loan with a negative credit history in BIK.

Loan for those in debt without creditworthiness

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A loan for those in debt without creditworthiness is an offer of non-bank loan companies that grant so-called quick cash loans – payday loans. It is an alternative to the credit offer of banks that provide financing only to persons with creditworthiness.

Online loans are aimed at people who may have:

  • problems paying off their obligations,
  • negative credit history in GFI (Credit Information Bureau) or GC,
  • arrears collected by the bailiff.

An important factor that determines the granting of loans for those in debt is timely repayment of the current debt.

Do you know that…

According to data provided by the Good Finance – Polish consumers in 2018 took out consumer loans for a total value of USD 68 billion.

Where to borrow money without creditworthiness?

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Regardless of whether your debt is an unpaid loan installment or unregulated gas or water bills – you can apply for loans for those in debt online.

There are many offers on the market, but to find the one that best suits your needs, use the payday compare tool. You can compare all available offers of non-bank companies, providing a specific repayment period and the amount you are interested in.

The presented proposals will differ from each other in the amount of the monthly installment and the total cost of the loan. You will also compare GFI loans that interest you.

Loan for those in debt – how to get it quickly?

Loan for those in debt - how to get it quickly?

The procedure for obtaining a loan for an indebted person is much shorter than when taking a standard loan. The lender is only interested in the amount and regularity of inflows to the account.

Usually, there is no need to provide an employment contract and other certificates. All you need is your ID card and account statement. Most loan companies make loans online, you won’t have to move from the couch.

A consolidation loan without creditworthiness

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A consolidation loan is a type of financing that allows you to combine all your loans into one installment. Until recently, only banks could offer their clients consolidation loans. Today, even people without creditworthiness can get a consolidation loan – from a non-bank company or private investors.

Non -bank companies that grant a consolidation loan to those in debt accept various sources of income. Depending on the company that grants the loan, you may be required to provide proof of employment, a ZUS certificate or a bank statement that confirms your receipt.

When you take out a debt consolidation loan, you must have collateral. There are companies on the market that grant consolidation loans without collateral in the form of pledges.

Consolidation loan without creditworthiness – what documents?

Consolidation loan without creditworthiness - what documents?

As in the case of cash loans for those in debt – an ID document (ID card) is sufficient. If a foreigner wants to take a loan, he must submit a document confirming the right to permanent residence on the territory of the country.

In addition to the ID document, you must complete all loan agreements that you want to consolidate. It can be a mortgage, cash loan or credit card agreement. You will also need a debt certificate – the loan amount will be calculated on this basis.

How to lower your mortgage costs? – 8 ways to lower your mortgage loan

Everyone would like to pay for the mortgage as little as possible. Already at the stage of choosing the commitment, it is worth reaching for the mortgage credit ranking, which collects in one place the current offers of financial liabilities with mortgage collateral.

It is easier for a customer to choose a specific loan when he sees the characteristics and costs of at least several similar proposals. Let’s see what else to do to minimize the cost of the mortgage.

What does the cost of the mortgage consist of?

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The basic cost of a mortgage is its interest, repaid by the borrower on a monthly basis, together with each principal and interest installment. The total cost of credit is basically influenced by two types of costs:

  • interest expenses, depending on the mortgage interest rate;
  • non-interest expenses not related to credit interest.

The mortgage interest rate depends on two factors:

  • interest rate – variable, independent of the bank, set by the Good Finance Investment according to the main interest rates of the Monetary Policy Council (Monetary Policy Council) – it can be, e.g. GFIC 3M or GFIC 6M;
  • bank margin – a fixed value determined by the bank, which does not change when the mortgage is repaid but is negotiated by the borrower at the bank.

The customer can only influence the amount of the credit margin, on which the mortgage interest rate depends. Its level depends on several parameters, including the currency of the loan, the customer’s own contribution or the credit capacity and history.

Non-interest costs of mortgage loans include such fees as:

  • commission for joining the loan, charged by the bank;
  • fee for considering the loan application;
  • fee for the valuation of the property, which is to be used as collateral for loan repayment;
  • compulsory insurance premium, including bridging insurance until the mortgage is in force for the benefit of the bank or low own down payment insurance;
  • other fees.

The total credit costs are within the APRC mortgage. APRC is the annual real interest rate on the loan that includes all costs associated with the loan, including the change in the time value of money.

How to reduce the cost of a mortgage?

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Mortgage costs and usually these costs are not small, especially when the repayment of the liability is spread over many years. However, you can take appropriate steps to reduce this cost. We give 8 such ways.

Comparison of offers from several banks

The customer can do a lot to reduce his costs before starting negotiations with the selected bank where he wants to take out a mortgage. We suggest taking your time to compare bank offers. The best offer may not necessarily be the bank’s proposal where the customer has their personal account.

The most important is to compare the proposals of a few or several lenders. It is worth verifying whether, with a given customer’s creditworthiness, you can get a loan and in which bank such a commitment will be as cheap as possible.

You don’t have to collect offers yourself. Much faster verification can be done thanks to the mortgage comparison website, which presents current proposals from various banks.

Rational use of bank promotions

Many banks periodically organize various mortgage loan promotions, for example, lowering the commission for joining the commitment or the loan margin. It is worth recalculating whether such an offer is really as attractive as it seems.

Sometimes the bank’s margin is lowered only for a certain period of time, after which it returns to its original level, which will not necessarily be lower compared to mortgage offers from other banks.

In addition, it may turn out that the customer, of course, has the opportunity to take advantage of an attractive bank promotion for a mortgage, but only if, at the same time, when he decides to commit, e.g. to use a credit card or offer on a bank account.

Care of additional products

Banks are often willing to offer the customer better mortgage terms in exchange for using another, additional product. This is cross-selling – a solution whose choice can often pay off. First, however, the borrower should read the terms of use of additional products in detail.

If the requirement to use an attractive credit offer is setting up a free bank account, then there is no problem, but if the bank requires setting up a paid account and taking an additional credit card, it may entail some fees, “eating” benefits resulting from the reduction mortgage costs.

Negotiating mortgage terms

It seems obvious that one way to reduce the costs associated with taking out a mortgage will be negotiating the terms of the loan agreement. However, many customers are unaware that this is possible.

A client’s negotiating position is stronger if he has:

  • high own contribution to the loan,
  • good credit history in GFI,
  • high creditworthiness confirmed by relevant documents.

Negotiating the terms of the contract should be preceded by the borrower with adequate preparation for the interview with a bank employee. During the negotiations, the client may refer to many years of cooperation with a banking institution, high own contribution and other factors in his favor.

Shorter repayment period

Borrowing money under a mortgage for a shorter period of time will reduce your total borrowing costs. The sooner we get rid of the debt, the better, although it will probably involve paying monthly relatively higher loan installments.

On the other hand, the shorter loan term will result in interest being charged shorter and, as a result, lower. The differences between mortgages taken for 15 or 30 years may amount to tens of thousands of USD.

Mortgage Refinancing

Customers who have been paying back their mortgage for some time but want to reduce their installments may try to refinance their commitment. This involves transferring the loan to another bank, which may be associated with the possibility of developing more favorable loan terms than the current ones.

However, it cannot be ruled out that with such an operation you will have to pay a fee for the early repayment of the mortgage in the parent bank, and in the new bank – a commission for granting the obligation.

Early repayment of the mortgage

Early repayment of the loan to the bank is another way to reduce the cost of the mortgage. At any time, the borrower may make its early repayment – total or partial, in accordance with the Act of March 23, 2017. Then he can also recover money for interest and other costs that fell during the period for which the loan agreement with the bank was shortened.

Importantly, in the case of loans bearing interest at a variable interest rate, after 3 years of regular loan repayment, the bank may not charge the borrower for early repayment. When it comes to loans with a fixed interest rate, the bank has the right to always charge such a fee, which is why it is worth checking it out before you pay off your mortgage.

Loan repayment according to decreasing installments

Borrowers can most often decide whether they want to repay their mortgage according to decreasing installments or equal installments during the loan period.

With decreasing installments, a fixed amount of capital is given to the bank every month and a different amount of interest calculated according to the outstanding liability. The advantage of such a loan repayment mode is that the debt is given faster.

Thus, the client gives the bank less interest in total than in the equal installments system. The only problem is that the banks make it possible to pay off the mortgage in decreasing installments with very good creditworthiness of the client.

How to reduce the cost of a mortgage in francs?

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In the case of franc mortgage loans, the solution to reduce the cost of lending is the repayment of principal and interest installments directly in a foreign currency. This way you can reduce the costs of currency spread.

In addition, judicial valorization may also be applied to the mortgage contract. It is a civil law institution that enables a court to change the amount of the benefit in the event of a significant change in the purchasing power of money after the liability arises.

Many borrowers of USD mortgages took them when they paid 2-3 CHF for 1 CHF on the currency market. Currently, it is even twice as much, which is why the possibility of using valorization seems most justified.

Holders of loans in francs can ask the court to determine the correct amount of the liability to the lender, taking into account the actual cost of granting the loan by the bank.