What should the loan agreement look like?

The contract is an essential document confirming the conclusion of the transaction and it will also be the basis for potential future claims for both the lender and the borrower. Online payday loans or installment loans are the subject of a consensual agreement, i.e. one which is agreed by both parties. In reality, however, the loan company imposes its own formula, and the consensus is only whether the borrower signs the contract or not. This does not mean that such contracts are bad as long as they are legal and do not directly harm the interests of the borrower.

Mandatory elements of the loan agreement

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It is true that the law allows for more or less arbitrary forms of contract, but it also specifies elements that must be included in such a document and elements that must not appear. As different companies’ contracts can take different forms, it is worth following the guidelines below when analyzing the document.

Clauses not allowed – these records should be alarming

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When signing the contract, the loan company is in a stronger position, which may impose conditions. However, they are not unlimited, and the lender must act in accordance with the law, in particular in accordance with the 2016 Act on competition and consumer protection. It lists prohibited clauses, i.e. those which are extremely unfavorable to the borrower and are inconsistent with legal ethics. In the light of these provisions, the lender need not be obliged by these provisions, even if he has signed the contract in which they appear. However, pursuing your rights is tedious, so it’s better not to sign such an agreement at all.

Let’s read the contracts

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Reading the contract will help you avoid adverse conditions. The lender should have no doubts at the time of signature. If there are any, the easiest way is to ask at source or consult such a contract. Reading contracts is a way not only to avoid harmful entries, but also to gain greater awareness of the importance of the obligation and the possible consequences of non-repayment.

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