As the availability of loans, quick loans and finally mortgage loans developed in Poland, Banks, and over time also non-bank financial / credit companies, began to outdo each other in loan offers, which were becoming easier and faster. available, where the creditworthiness test was based on scoring or not at all.
Along with the development in Poland of the availability of loans, quick loans or, finally, mortgage loans, Banks, and with time also non-bank financial / credit companies, began to outdo each other in loan offers, which became easier and faster available, where creditworthiness testing was carried out on the basis of scoring or not at all. This has led many people to a situation where monthly credit obligations began to significantly exceed their monthly income, and new deadlines appeared everywhere, such as the credit spiral or consumer bankruptcy. Effect? Banks were less and less willing to grant (and grant) loans, more and more often potential borrowers were, and are, subjected to in-depth credit analysis, and new companies appear on the market to buy back debts, enforce them or offer loans for indebted people. It is for these credit companies that the situation of many indebted Poles, and the lack of legal regulations related to granting loans and their costs, has become a real Eldorado. Let’s take a closer look at the concept of loans to people in debt.
Loans for those in debt, what are they and for whom?
Loans for indebted people are an offer of credit companies addressed to people who, due to their current debt or negative credit history, will not certainly receive a loan from a bank. These are usually people with arrears in repayment of liabilities, with terminated bank agreements or even with bailiff seizures.
As you can see, virtually anyone can get such a loan. The condition is usually only the possession of an identity card (so the applicant must be an adult), permanent income from an employment contract, disability or retirement benefit, residence in Poland, a bank account and an active mobile phone number – it is worth mentioning that these conditions are from companies operating on the market are determined individually. The decision to grant loans to indebted persons takes place without checking the customer’s situation in the databases of the Credit Information Bureau, Economic Information Bureau or the National Debt Register.
Advantages and disadvantages of loans for indebted people
The advantages of loans for indebted people probably include the following factors:
- no verification of information about the borrower in BIK, BIG or KRD registers
- minimum formalities – some companies only need to scan an ID card
- quick credit decision – usually from 10 minutes to one day
- no need to go to the facility – the application is submitted online or by phone
- funds transferred directly to the bank account
- simple and transparent installment repayment system – to the representative coming home or by transfer to the account indicated in the contract.
The indicated advantages may undoubtedly encourage people who are already in debt to take out loans. However, it is also worth knowing their disadvantages before making a final decision.
Disadvantages of loans for those in debt
- low loan amount – from PLN 100 to PLN 5,000 (however the amount of the first loan may be lower than the requested one)
- short loan period – from 1-30 days, in the case of a higher amount, the repayment may be spread up to 12 months
- high service costs and loan granting -determined individually by a credit company
- high APRC (Actual Annual Interest Rate)- credit companies granting loans, the so-called In a way, they compensate for the losses related to non-repayment of the loan with high costs,
- fees for examining the loan application, extending the repayment date, etc. – also agreed individually by the credit company.
The biggest disadvantage of loans for indebted people is, in most cases, the loan itself, which can help solve the borrower’s problems for a while, but it increases the total amount of debt.
What about the legislator?
The state cannot prohibit borrowers from taking loans, and banks or credit companies from granting them. However, it may, and even should, create a uniform, clear and transparent system for all, defining the rules for granting them and, most importantly, defining the maximum costs that the borrower may incur. And while the situation in the case of banks is clear, because they are subject to the Consumer Credit Act and are accountable for their actions before the Polish Financial Supervision Authority, the situation in the case of credit companies is difficult. In Poland, despite the functioning of the Anti-usury Act, the main task of which is to protect the interests of the consumer against usury interest rates on loans and credits and excessive additional fees, by manipulating the dates, credit companies continue to do what they want, therefore a 0% loan may be several times higher than the one with at a nominal interest rate of, say, 15%. Of course, changes were introduced to the Act, but in this respect, or rather in terms of the lack of clarity and transparency of the provisions, the possibility of their free interpretation, Poland still lags far behind other EU countries, where non-bank loans, also for indebted people, have been known since years and are intended to help and protect the consumer, not to immerse him even more.
Summing up, one should consider whether loans for already indebted consumers are good solutions. And although we will not find a clear answer here, because everything depends on individual needs, it is worth being aware of their real costs, taking into account such solutions.