The Consumer Credit Act defines in detail how cash, cheap and expensive loans are to be presented. The provisions resulting from regulations adopted throughout the the country apply to contracts concluded in connection with any loans for an individual recipient whose value does not exceed USD 255 550.
In addition, the Act also includes loans secured on real estate mortgages.
Thanks to special forms that contain costs and fees that are the most important from the borrower’s point of view, customers can freely compare offers and make choices based on the economic account, rather than the marketing tricks of hiding additional fees. The legislator assumed that not everyone knows what payday loan to choose and what parameters to look for before signing a contract with the bank.
Banking law in practice
The Act requires the loan agreement to be in writing and contain specified date such as: the amount of the loan, the manner and date of repayment, all conditions regarding the interest rate and the possibility of changing it, all conditions for calculating fees and commissions , way of securing receivables, information on all additional costs arising during the term of the loan agreement or in the event of early repayment of debt.
If borrowers know this data before signing the contract, they can easily compare individual offers from the payday loan offer. There is no banking product that would be equally profitable for all customers.
Cheap loan sought
Cheap payday loan is sought after by all borrowers, but it means different features for everyone. Some are looking for a loan with the lowest total cost. For others, the low installment is what counts, which makes it possible to make a commitment without worrying about the amount of creditworthiness.
That is why some borrowers choose decreasing installments, which are characterized by a lower cost of borrowing capital, while others base their liabilities on equal installments, which do not generate higher unit costs.
And what’s up in the credit market
The financial services market has strict rules that determine the price of individual services. First of all, you pay for the risk associated with investments. The more we risk when choosing a deposit or investment fund, the greater the interest rate will be.
The more banks risk, the more expensive their products will be. Customers pay for processing applications and making decisions. Short time means reduced formalities and increases the borrower’s risk.
Another category of offers are products specially prepared for customers. Banks analyze the amount of inflows to the account, the state of deposits, insurance and other investments, calmly examine how the client repays the existing liabilities and on this basis offer him a dedicated loan.
Such an offer is usually a quick and cheap payday loan, but due to careful checking and limiting the amount it is a small risk and is therefore a relatively cheap product.