There are various types of loans on the financial market in Poland. One of them is a private loan. Let’s take a closer look at it.
In everyone’s life comes a moment when we have to decide to borrow money. In this case, how many people, so many situations. Sometimes we are forced to borrow cash because the TV broke down and we want to buy a new one. Another time we got the opportunity to take advantage of a unique trip, and we don’t have any savings on our account.
What is a private loan?
We don’t need to be expert on loans and finances to guess what a private loan is. The simplest definition is that it is a loan granted by a private individual to another private person, company or organization. It is as if we were lending our savings to a neighbor, colleague or owner of a local shop.
Private loans in Poland are becoming an increasingly popular form of borrowing money. Why are we willing to borrow from private individuals or provide our funds to others? First of all, due to the lack of intermediaries who in such circumstances would charge an appropriate fee for their services.
A characteristic feature of this form of loan is also the great freedom in determining the terms of the contract, which has its pros and cons. If we get into debt for people we know, we can arrange convenient debt repayment conditions for us, and sometimes even the lack of any interest. Probably it will look different if we borrow cash from a stranger – knowing that this person wants to have the benefit of making available their funds, we must take into account any interest.
Of course, borrowing money must be based on a previously drawn up contract and we must remember to read it before signing. Many people need cash very quickly and, blinded by this vision, do not pay attention to the detailed provisions of the contract. This is a big mistake. Hitting a dishonest person may get into serious financial trouble if the lender has entered in the contract a provision with very high interest or a horrendous amount for unpaid debt on time.
How do you find a person who will borrow money?
As mentioned before, we can borrow money from a person we know. It can be a member of our family or a friend. In these situations, if the two parties trust each other, there is usually no need to write out a loan contract. Of course, we can protect ourselves in this way if we borrow a larger amount.
However, we will not always find a person in our environment who will be able to lend us money. We then need to find another way to get the cash we need.
Of course, we can go to the bank, but remember that a bank loan involves lengthy procedures. The necessity of submitting relevant documents, earnings statements or providing the purpose for which we will spend borrowed money can effectively discourage us from the bank.
So let’s get interested in private loans that we can get online. Few people know that on the network we can find portals that connect people who have money and want to borrow it, with people who need this cash.
As mentioned before, this type of loan is based on an agreement drawn up by both parties. In practice, it looks like this: a person wanting to borrow someone’s money puts up an auction on the portal, on which the interest rate and loan repayment period are indicated. Someone who is interested in contracting debt through the portal contacts the lender and the two parties individually agree the exact terms of the contract.
Dangers of Private Loans
For these types of loans, both the lender and the borrower are exposed to some risk.
The lender, deciding to share his own money, sometimes high savings, gives it to a person he does not know at all. He does not really know who is on the other side, whether this person is honest and whether he will be able to pay the debt. In some cases, lenders ask for an income certificate or other document confirming that the borrower has a stable income before borrowing money, but this is very rare.
In turn, the borrower may also be exposed to a dishonest person. An improperly constructed contract, which enters into its provisions high penalties in the event of failure to settle the debt on time, is a frequent practice of fraudsters who want to use anything unconscious people, whose life situation often forces them to borrow money in such a way. And all this thanks to the hastily signed contract. We wrote about what should be included in the contract in the article What should a loan contract contain?
What is safer than a private loan?
It turns out that the risk for private loans is quite high. However, if we need money quickly, we can use financial institutions that grant credit decisions in a short time. We can take out such a loan on the portal specializes in providing long-term loans. Borrowing money from such institutions is much safer because their activities are regulated by appropriate legal provisions.