Contrary to appearances, the construction of a cash loan is not complicated – it mainly consists of two price parameters – interest and commission. However, banks may expect the borrower to provide additional credit products or further non-interest charges – then the situation may get complicated.
Cash loan interest rate
The interest rate on cash loans is a basic price factor for the bank’s loan offer. It is the rate at which the bank will charge interest on the amount borrowed. It is worth remembering that the maximum loan interest rate that a bank may propose is regulated by law. Currently, the maximum interest rate on cash loans according to the provisions of the Act of May 12, 2011 on consumer credit (i.e. Journal of Laws 2018, item 993) and the Civil Code is 10%. This is due to a very simple formula: the maximum interest rate on a bank loan or loan cannot exceed twice the statutory interest, which is equal to the sum of twice the reference rate of the NatBank of Poland (currently 1.5%) increased by 7 pp. Therefore, the bank cannot offer a loan with a higher interest rate than 10% (= 1.5% x 2 + 7%).
The banks set the interest rate on the loan depending on the amount borrowed and the period for which the loan is taken. The borrower’s creditworthiness and credit history is also important in this process. The less it spends relative to its revenues, the better credit financing terms it can count on.
Commission on cash loans
The commission is the second most important cash loan parameter after interest, which should be taken into account when comparing offers. The commission means the amount of the fee that the bank charges for preparing the entire cash withdrawal procedure. For example, if the commission was set by the bank at 10% and we borrow PLN 10,000, the bank will collect PLN 1,000 (PLN 10,000 x 10% = PLN 1,000). You must also remember that depending on the level of commission collection, its cost may be higher than we think. The bank may require payment of the commission separately (before the loan is taken out), less the amount borrowed, or credit it. Then the loan amount will be increased by a commission and it is only from this amount that interest will be accrued at the interest rate.
The commission rate can also be set by the bank by analyzing the borrower’s creditworthiness and credit history or simply as part of a margin and commission network. Then the cash loan commission will depend on the amount borrowed and the loan period.
Cash loan – what else does it pay attention to
However, a cash loan is not only about interest and commission. Banks can often charge additional preparation fees or require additional credit insurance. Then the cost of the bank loan increases.
Therefore, instead of comparing the interest rate and commission itself, it is worth looking at the value of the APRC – the actual annual interest rate. It is a statutory parameter that takes into account all costs associated with the loan – interest rate, commission and how it is collected, insurance and other fees. Thanks to this, we can easily check which offers offered by banks are more favorable – the lower the APRC, the lower the total cost of the loan will be.
How do you take out a cash loan?
The basic way to get a cash loan is to submit an application at a bank branch. Today, however, banks allow several additional channels through which you can take care of the entire procedure. First of all, it is an online application on the bank’s website, after which the bank contacts the borrower by phone. After determining the details, a ready loan agreement is sent to him to sign.
Taking a loan from your own bank, you can often count on additional facilities. The bank knows our earnings and expenses and can quickly calculate loan costs and assess creditworthiness. Therefore, you can take a loan directly in online banking or a mobile application – just a few clicks and the money will be in our account without unnecessary formalities.
Loan without certificates – is it possible?
A smaller scope of formalities also applies to a loan based on a statement, also called a loan without certificates. Then, instead of documents from the employer in which the company certifies the amount of our earnings, all you have to do is submit to the bank your own income and expenditure statements. The bank will start the loan procedure on their basis.
However, one should take into account that such a loan is associated with restrictions. The loan without income declarations due to the less certainty of the information provided will be available for smaller amounts and shorter periods than with a standard cash loan agreement.