The banks’ loan offer usually includes cash loans , which can also be referred to as cash loans and consumer loans. It is a financial product provided by banking institutions that allows you to pursue any credit purposes, although it happens that banks ask a potential borrower to specify for what purposes he would like to spend the amount of money incurred.
Pursuant to the Banking Law, a cash loan is granted on the basis of a written agreement, if it is contracted for an amount of at least $ 1,000. It is an agreement in which the bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash intended for a specified purpose, and the borrower undertakes to use the loan under the conditions specified in the agreement. He must reimburse the amount of credit used, together with interest, within the previously agreed period (Article 69 of the Banking Law).
If a cash loan is granted in the amount of up to $ 255,550 to natural persons who do not run a business, for purposes not related to such activity, they will be also considered a consumer loan.
The Act of May 12, 2011 on consumer credit specifies in art. 3, that such a loan will be a credit agreement regarding a liability in an amount not exceeding $ 255 550 or equivalent to this amount in a currency other than the Polish currency. The loan is granted by the lender to the customer who is a consumer within the meaning of the Polish Civil Code. In particular, the consumer credit agreement is considered to include bank loan agreement.
The characteristics of a cash loan include:
- any purpose of lending,
- simplified credit procedure,
- loan amount in the range from several hundred dollars to even several hundred thousand dollars,
- relatively short loan period – from several months to 6-10 years.
Cash loans are granted only by banking institutions – banks and cooperative savings and credit unions for private clients and entrepreneurs. The customer can only be an adult who has full legal capacity. In addition, such a person must have sufficient creditworthiness and a good credit history at the Credit Information Bureau (BIK).
Cash loan – three types of liabilities
Banks can offer clients cash loans in various forms. There are basically three main types of cash loans that can be found in bank offers. Those are:
- consumer loan, intended for the current consumption of the borrower;
- overdraft – granted as part of a savings and credit account, allowing the use of a credit limit (the so-called credit line) after the client’s own money has been used; it is a revolving loan which is repaid after each payment to the account and its amount is again available to the borrower;
- credit card credit – the card allows you to make transactions in stores and service outlets, and, if necessary, will allow you to withdraw money from an ATM, each time using funds granted as part of a cash loan to the customer.
It is up to the customer what kind of cash loan they will try to get. He can choose a standard cash loan with a one-off withdrawal of funds – to his own hands or in a non-cash form, to the indicated bank account – which is repaid in monthly installments. However, if a revolving credit facility for a ROR (savings and settlement account) or a credit card seems to be more convenient for the customer, then if the bank meets the conditions set by the bank, it can also be borrowed in this way.
Currently, you can more often take out an online cash loan, i.e. without visiting the bank to get the commitment in the desired amount. An online cash loan without certificates is most often available to customers of banks in which they have their personal accounts, or people who have established cooperation with the bank on a different level. It is clear that a cash loan without certificates can be obtained in a very short time, like payday loans in a non-bank company.
Cash loan – what costs does the borrower bear?
Each time you take out a cash loan from a bank, you have to take into account certain costs. The borrowers who decide to use the cash credit card loan are the lowest borrowers. A cheap cash loan in this case results from the fact that banks grant customers over a 50-day interest-free period. It is intended for the settlement of a credit card and for repayment of debt. If the borrower pays the required payment within this period, then the interest on the cash loan will not be accrued.
On the other hand, when it comes to classic cash loans, costs such as:
- commission for joining the loan,
- credit interest,
- credit insurance,
- other fees related to any security for liability repayment.
Cash loans do not always require collateral. If the bank does not request it, you can reduce the cost of borrowing. Interest remains the most important cost. The cheapest cash loan will have a low nominal interest rate and at the same time a low commission for granting the liability, which will automatically translate into a low real annual interest rate.
Do you choose a cash loan? The calculator will help you make a decision
You can find numerous financial calculators on the network, including cash loan calculator, which allows you to calculate, based on the given criteria, what the loan installment will be and how much the final cost of the loan will be. Using calculators is very simple. Users usually only need to enter:
- loan amount,
- repayment period,
- interest rate per annum.
After providing such criteria, you can check the amount of the probable capital and interest installment of the cash loan and review the loan repayment schedule.
How to take out cash loans – formalities at the bank
The basis for applying for a cash loan in a bank is a loan application. It can be submitted more and more often via the Internet (an example is the mBank cash loan offer for existing customers). The application must be complete, and the banks also demand that their clients add attachments to it, such as employment certificates and the amount of income earned per month. On this basis creditworthiness is determined. A cash loan will not be granted if this ability is too low for the applicant.
Before the cash loan is granted, the bank will also check the client’s credit history in BIK. Negative entries in such a story will cause the lending institution to reject the client’s application and not grant a cash loan.
When accepting the loan application, the bank checks whether the applicant is the person he or she claims to be. To this end, a copy of the ID card should be submitted and an ID document presented to the bank employee for inspection.
Cash loan ranking – useful information
Cash loan comparison, just like the ranking and loan calculator, are tools that facilitate the selection of bank loan offers. An interesting fact is that a loan with a low nominal interest rate will not always be the cheapest cash loan we can use. Banks may increase the financial benefits derived from the financial liabilities granted through a higher commission or additional repayment collateral.
A comparison of cash loans in terms of APRC and the total cost of lending allows you to decide what offer to decide on. If you take out a cash loan, the ranking of the offers currently available on the market will help you choose the one that will be the most attractive.
Cash loans at banks and cooperative savings and credit unions can be taken to finance current consumption, vacation and renovation plans for the purchase of a car or electronic equipment. In a word, for any purpose for which we have no savings to be able to achieve it. It is always worth checking in your credit offer how much your cash loan really costs. All costs will be reflected by the APRC of the loan, i.e. the percentage calculated annually from the amount of the loan capital and the total cost of the loan, given in numerical form for the entire loan period.