The loan agreement specifies how much, for how long and on what terms the bank will borrow money from the borrower. Regardless of whether you want to use a mortgage, cash or revolving loan, it is important that you understand every part of the loan agreement. Check what you need to know before you sign such a document and which elements are particularly important.
Credit agreement – basic information
The loan agreement may be concluded for a period of several months or even several dozen years. No matter how long it lasts and what financial product it deals with, you need to carefully analyze all of its records. When you sign a document that is unfavorable for you, you are exposed to excessive costs, and you may even stretch your home budget too much.
Therefore, if you have any doubts about the content of the contract, you should always ask their bank consultant for clarification. Nevertheless, you will find the answer to most of your potential questions in the guide below. Although we focus mainly on the mortgage, reading it will help you become an aware borrower. It is important to be able to use various credit products in a cost-effective and safe way.
Credit agreement – definition and characteristics
Mortgage, cash, car, revolving, consolidation, investment or credit card – individual of these instruments may differ, for example, in the way the funds are used, the minimum and maximum amount of financing, the repayment mechanism and deadline, or the application procedure. Due to the fact that different types of banking products are different, the related contracts also take on different forms.
On the other hand, for each product, the general definition of a loan agreement is included in the Banking Act:
Through the loan agreement, 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 it under the conditions specified in the agreement, return the amount of the loan used together with interest on the specified repayment dates and payment of commission on the loan granted.
Be aware that each lender individually constructs the terms of the loan agreement (taking into account the applicable laws of banks). Because it also determines the amount of interest and the commission, if any, remember to carefully compare the offers in terms of costs.
While the contracts differ in terms of terms, their design is often similar and divided into two parts. The first part is general and applies to all borrowers, while the second part already concerns a specific customer. The first usually regulates such issues as: the purpose and method of spending, the principles of calculating interest and other costs, as well as the rights and obligations of the parties to the contract – the borrower and the lender.
Credit agreement – general provisions
Parties to the loan agreement
At the beginning of each loan agreement there is information about the parties to the agreement. Therefore, already at this stage you need to be vigilant and check whether your personal data has been correctly entered in the document. In addition to the name and surname, it includes such information as: series and number of ID card, PESEL number and registered address.
If you apply for a loan (e.g. cash or revolving) in a bank where you already have a personal account, you will not even be asked to provide an ID card. In this case, all necessary information about you is already in the banking system, and the procedure is carried out entirely online.
Loan amount and currency
Depending on the type of loan, you can raise an amount from several hundred to even several million zlotys. The specific amount of financing is indicated in the loan agreement. There are also mortgage loans denominated in a foreign currency on the Polish market – they are subject to slightly different rules. For example, if you take out a loan for an apartment in euros, then the contract must specify the methods and dates for determining the exchange rate. On its basis, the loan amount and installments paid will be converted. Remember that the currency of the mortgage must be the same as the currency of income.