In banks, you can take advantage of various types of loans, among which consumer credit and consumer credit are available. These are two loans with some similarities but also undeniable differences. It is worth knowing how to distinguish them and which loans can be classified as consumer loans and which loans as consumer loans, e.g. cash loans.
What is consumer credit?
In the provisions of law, the legislator precisely defined what a consumer loan is and how and who can take it. The definition of this banking product was included in the Consumer Credit Act of May 12, 2011. The specificity of consumer credit is strictly defined here.
What is this? Well, a consumer loan agreement is one in which the value of the financial liability does not exceed USD 255 550 or the equivalent of that amount in a foreign currency. In addition, such a loan is granted for purposes not related to the borrower’s business or professional activities. Consumer credit may be taken only by natural persons.
In the light of the aforementioned Act, a consumer loan agreement also means a loan agreement not secured by a mortgage, which is intended for renovation of a house or apartment, including in an amount greater than the amount specified above.
The Act also clarifies which loan agreements can be considered as consumer credit. Among them were:
- loan agreement;
- loan agreement within the meaning of the banking law;
- agreement to postpone the consumer to the date of satisfying the cash benefit, if the consumer is obliged to bear any costs related to the deferral of the benefit;
- credit agreement, in which the creditor incurs an obligation to a third party and the consumer undertakes to return the fulfilled benefit to the creditor;
- revolving loan agreement.
A consumer loan is not, for example, a loan agreement whose interest rates are lower than those commonly used, including a loan with a subsidy or a loan with 0% interest rate.
Consumer Credit Act – what has changed?
The legal basis for consumer credit is the Consumer Credit Act of May 12, 2011. Consumer credit is currently granted by various entities, including banks, loan companies and credit unions, based on current regulations. They were implemented in the country on March 11, 2016, slightly changing the rules on which consumer credit is made available to customers.
The Act was slightly modified, and the most important change was the introduction of non-interest loan cost limits, which include all costs related to the consumer loan agreement, excluding interest. At present, non-interest loan costs over the entire lending period cannot be higher than the total amount of the given liability.
In addition, if the consumer has not repaid one loan, lending to the next one by the lender within 120 days of the first payment will not be a way to be able to charge him more non-interest loan costs over the limit. It is calculated jointly for all loans granted in this way.
Features of consumer credit
We already know what specific credit consumer credit is. Its features may coincide with those of other liabilities, such as loans or cash loans. What should we know when taking a consumer loan? Up to what amount can you take it?
Based on the information presented above, it can be summarized that a consumer loan is a loan granted to a consumer for purposes not related to his business or professional activity, payable and granted in the amount of up to USD 255 550. If the loan amount is higher, it will not be considered as a consumer loan.
Customers are undoubtedly interested in the interest rate on such a commitment in the context of a consumer loan offer. It is regulated by the provisions of the Civil Code. It stipulated that the interest rate on loans and advances, including consumer loans, may not exceed twice the sum of the reference rate of the National Bank and 3.5 percentage points.
Currently it is 10 percent. per year. There is no upper limit on the commission charged by the lender for consumer credit, although the sum of non-interest costs may not exceed the total amount of credit.