Due to recent legal regulations and growing competition in the market, loan companies have ceased to be associated with usury, extortion and the debt loop. However, companies that maintain their position in the market, leaders in online loan rankings, are trusted companies and, when it comes to costs, they cannot go beyond certain limits.
A loan without costs?
When borrowing for the first time, you can count on costs of literally 0 zlotys, provided that one condition is met, that is, keeping the loan repayment on time. These types of loans are offered in virtually all payday loans companies – it is a good idea to check the overview of companies offering free loans in advance .
Another form of “almost free” loan is the introduction of a small fixed fee. The first loan for USD 10 in Wonga or Jenny Credit is equally popular, and does not expose the customer to any other additional costs.
Loan costs – basic concepts
Loan costs usually include interest and non-interest costs. The latter include all other costs due to the company for servicing the loan. The interest rate – a percentage of capital, i.e. the amount of the loan, due to the owner of the capital – remember, the money from the loan in practice still belongs to the loan company. Some companies give up the charging of interest.
Late payment costs – costs that only unreliable customers have to bear. According to the law, interest may not be higher than 14% of the amount due annually. Such costs are also fees for prompts and debt collection proceedings. Non-interest charges – all fees that the customer will have to pay outside the interest rate. Most often it is a commission for granting a loan, a preparatory or administrative fee, and sometimes a fee for starting a loan or insurance, if required.
The amount of the loan costs and the anti-usury act
The Anti-usury Act has introduced some restrictions on imposing costs on clients of loan companies, eliminating the freedom to determine the cost of granting a loan. From 11 March 2016, the interest rate on the loan may not exceed 10% per annum, while all non-interest charges may not be greater than the sum of 25% of the basic loan amount and 30% of the resulting amount per year.
The law also introduced a requirement for transparency. A future borrower who applies to a non-bank company must know what the total cost of the loan will be. Real total costs must be expressed specifically and in a way that leaves no doubt. Therefore, small print, illegible font or complicated contracts, in which only the minimal costs of loans are given, are forbidden. This is also how online loan rankings compare all available offers, so you can easily choose the cheapest one.