The sum of liabilities incurred in non-bank companies increased in 2019, however, non-bank loans in installments are not often chosen by customers. Although numerous regulatory changes have made the lending sector safer and more professional, there is still a lot of wrong information about them. Let’s verify the myths about installment loans!
A nationwide report on outstanding debt and unreliable debtors from March 2019 – we borrow power. In 2018, the total amount of outstanding non-credit obligations was already USD 39.92 billion. Although we gladly use non-bank installment loans and we know more and more about them, in many matters we still have wrong beliefs.
Example? We believe that non-bank companies operate outside the law or using their offer is dangerous. Many people also think that anyone who applies for a loan will easily receive it and will not undergo verification. In addition, some of us are convinced that you must have a bank account to receive an installment loan. How is it really
MYTH 1: Fine Banks operate outside the law
Fine Banks cannot (and in the great majority of cases do not want to) act outside the law. Legal acts, such as those from 2015, colloquially called the Anti-usury Act, clearly defined, among others the maximum amount of non-interest loan costs was clarified by provisions on consumer credit advertisements or created a full register of almost 500 loan institutions at the Polish Financial Supervision Authority.
What’s more, by amending the Act on consumer credit, the definition of a loan institution was finally clarified. Persons who have been validly convicted, e.g. for a fiscal offense, may not sit on the authorities of such a company.
Companies that grant installment loans are currently subject to many legal and formal requirements for their business. How does it look like? They must be e.g. limited liability companies or joint-stock companies, they must show the share capital of min. 200 thousand USD and cover it from sources other than credit, loan or bond issue. In addition, consumer protection tools have been significantly strengthened and expanded – including Financial Ombudsman who, at the request of the loan company’s customers, may intervene in the complaint of a given product.
The company entered in the register of loan institutions, which is kept by the PFSA, shows that it has met the necessary statutory requirements to enter it on the list. However, it is worth knowing that it is not subject to the direct supervision of the PFSA.
The entry also does not confirm that the company meets the formal requirements imposed by the Consumer Credit Act, and the Commission itself cannot demand from the company explanations regarding the compliance of its activities with the law.
MYTH 2: Loan companies hide the real cost of installment loans
The transparency of loan costs is one of the pillars of professional non-bank companies. This was regulated by law in the amendment to the Consumer Credit Act of 2015, which one of the objectives was to clearly specify MPKK, i.e. the maximum amount of non-interest loan costs (these are all costs that the consumer incurs in connection with the loan agreement, e.g. APRC, but with excluding interest).
Before applying for a loan, we can calculate the cost of the commitment and the installment ourselves using the installment loan calculator. Many loan companies have their own financial tools on their websites to help calculate the cost of our commitment.
However, you must remember to check the loan agreement thoroughly if the fees provided there are in line with our offer. Our company has a special loan calculator, thanks to which it is possible to accurately estimate not only how much the total cost of our commitment will be, but also the amount of monthly installments and approximate repayment dates.
An example of transparent activities can be Good Finance. All costs have been presented here in a clear and transparent way. Why? Because a company that cares about the market image and high quality of services does not hide fees and commissions. What does this give the client? First of all, getting to know all the possible costs of the liability before taking the non-bank loan in installments.
MYTH 3: Everyone will get a non-bank loan in installments on a Fine Bank
No! Good non-bank companies apply the principle of responsible lending, i.e. they carefully verify the client and his identity. This allows you to tailor your loan proposal to the borrower’s options. How does it work in practice? At least on a thorough assessment of the creditworthiness of applicants for an installment loan.
Interestingly, thanks to the automation of some websites, it doesn’t take long to verify the application. Depending on the specific case, withdrawals may take only a few minutes. Sometimes, to get a non-bank loan in installments, you also have to meet additional conditions. On the example of Good Finance, in order to apply for an installment loan you should:
- be a citizen of Poland,
- be over 21 years old,
- complete the application on the site.
You can find more information on this subject in our guide: Are online loans for everyone?