Credit – what is it?

In accordance with art. 69 clause 1 of the Act of 29 August 1997 Banking Law 1, by the loan agreement, the bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash intended for a specific purpose, and the borrower undertakes to use it under the conditions specified in the agreement, reimbursement of the amount of the loan used together with interest on the specified repayment dates and the commission on the loan granted.

How the credit agreement should look – definition

In accordance with art. 69 clause 2 of the aforementioned Act 2, the loan agreement should be concluded in writing and specify in particular:

  • Parties to the agreement
  • The amount and currency of the loan
  • The purpose for which the loan was granted
  • Loan repayment principles and dates
    • A. in the case of a loan agreement denominated or indexed to a currency other than the Polish currency, detailed rules for determining the methods and dates for determining the currency exchange rate, on the basis of which, in particular, the amount of the loan, its tranches and principal and interest installments as well as rules for conversion into currency are calculated loan disbursement or repayment.
  • The interest rate on the loan and the conditions for changing it
  • Method of securing loan repayment
  • The scope of the bank’s rights related to the control over the use and repayment of the loan
  • Dates and method of providing funds to the borrower
  • The amount of the commission, if the contract provides for it; 10) conditions for making changes and terminating the contract.

Loan agreement in several sentence

A loan agreement is a type of agreement that we conclude in writing. The loan agreement contains obligations both for the party that grants the loan, i.e. the bank or credit unions and for the borrower, i.e. a natural or legal person or institution. In addition to the parties, the loan agreement must specify the amount and currency of the loan. Another very important point of the loan agreement is that it must specify the purpose for which the loan is granted. This can be, for example, buying a car or an apartment. In this situation, the borrower does not receive any money. The amount specified in the loan agreement is directly transferred to the seller of the good or service. The borrower receives cash or a transfer on his own account only in the case of a cash loan , and the purpose for which he will spend money from the loan is arbitrary and depends only on him.

The loan agreement also specifies on what terms and on what dates the loan will be repaid and the interest rate on the loan. By entering a loan agreement, the borrower undertakes to repay the loan installments on specified dates together with interest due under the concluded agreement. Often, you also need credit insurance, the costs of which are borne by the borrower. Credit insurance allows us to postpone loan repayment in case of various financial problems. It is worth insuring the loan, especially the one amounting to large sums. In the event of, for example, job loss, we will have the option of postponing the repayment, which will significantly reduce our budget and will not mean that we will have to become even more indebted, among others, in order to be able to repay the loan we already have.

The loan agreement must also contain the conditions for making changes and terminating the agreement.

  • The Act of 29 August 1997 Banking Law (Journal of Laws 2017 item 1876).
  • The Act of 29 August 1997 Banking Law (Journal of Laws 2017 item 1876).