Cash loan or quick loan?
Everyone who needs an injection of cash can take advantage of several different options for borrowing money, including: cash loan, installment loan or short-term loan (so-called payday loan). What are the differences between loans and borrowings? When is it better to take a loan and when to get a loan?
Bank loan – definition and types
According to the definition, this is a written agreement between the bank (lender) and the client (borrower). On the basis of this agreement, the bank undertakes to provide money for a specified period and purpose, and the customer to use the funds obtained as intended, and repay the amount plus interest and commission costs. It is important that loans cannot be granted by loan companies. It is the domain of banks and credit unions. However, it should be remembered that GFI may grant loans only to its members. It is also worth noting that when looking for a loan, we can turn to an agent who works with banks and provides professional advice. It is better to visit one broker who will check many offers from different banks at once, rather than visiting several banks and being checked each time.
There are several types and sub-types of loans, including loans for individuals, including mortgage, student and cash loans. Another type is a business loan, which includes investment and working capital loans.
In addition to cash loans, other loans are always for a specific purpose. It can be, for example:
- real estate purchase (housing loans, mortgages),
- buying a car (car loan)
- reduction of energy consumption for heating (thermomodernization loan)
- learning expenses (educational loan)
- repayment of other loans and liabilities (consolidation loan)
The purpose of the loan is related to its maximum amount, risk to the bank (which also implies the terms of the loan) and formalities that must be dealt with before you receive a transfer from the bank.
Application and loan agreement
Taking out a loan involves a lot of formalities. This process cannot take place without the potential borrower submitting the application and signing the loan agreement by both parties. The application contains such information as the loan amount, loan period, the purpose for which the money will be allocated, the repayment date and data on the client’s current financial situation. The content of the contract also has many elements. The most important of them are: data of parties, loan amount and currency, repayment principles and deadline, commission and interest rate as well as loan collateral.
The implementation of the loan agreement consists of several stages, so you have to wait quite a long time for the bank’s decision and receipt of money. What happens before the customer receives the money? After submitting the relevant application, the bank analyzes the borrower’s financial standing. He does this by combining several methods. The borrower’s history is checked in business intelligence.
The bank also checks the potential borrower in the Banking Register System belonging to the Good Finance Association. Each bank also has its own internal rules and scoring systems, on the basis of which it qualifies the customer for positive or negative consideration of the application. If the decision is positive, the parties sign the contract and only then opens the way for the borrower to receive money. Before or after payment, it may also be necessary to confirm that the money has been spent as intended – e.g. by providing a sales contract with the developer (in the case of a mortgage) or a car purchase / sale contract (for a car loan).
How is a loan different from a loan?
The loan can be granted by both an institution and a natural person. We can take out a loan, for example, at a loan company, but also with a family member or friend. The loan agreement is regulated in Poland by the Civil Code and consumer credit regulations. An important feature of the loan is that it generally has no specific purpose that the borrower must declare. Therefore, it is the equivalent of a bank cash loan for the customer. There are targeted loans on the market (e.g. a car loan), but cash loans currently prevail.
The subject of the loan may be not only money, but also items and goods. Each of us in our daily lives has taken out a loan more than once – not all of them are regulated by a contract. However, a loan for an amount higher than USD 1,000 should be documented.
Short-term loans from loan companies generally do not require any collateral. Instead, you need to confirm the source and amount of your income in some cases. Some companies grant loans only on the basis of information on the borrower’s credit history, obtained similarly to banks from business intelligence and information exchange systems created for the needs of loan entities.
How do you get money from a loan company?
Unlike applying for a bank loan, taking a quick loan does not require so many formalities. There are many loan companies in Poland, offering different types of loans and conditions. The most popular form of lending is online loan – the client sends the application via a form on the website, the lender assesses his financial situation and makes a decision. After signing the contract, the borrower can get the money even on the same day, which is not the case with most bank loans. A similarity can be a contract – for both credit and loan it should specify: given parties, amount, repayment date, as well as the amount of commission and interest.
Many clients use the offer of loan companies mainly due to the lack of formalities and the speed of payment. This affects the growing popularity of online loans, which under favorable circumstances can be obtained even in a few minutes. This allows you to take advantage of additional funds even during a visit to the store, when we want to buy something for which at the moment we do not have money.