Credit and loan
Credit and loan – one of the most popular financial products. However, they are often treated as synonyms, although in the legal and economic sense they are very different from each other.
The loan is an institution which has its source in the provisions of the banking law, however, as it results from the Act on Cooperative Savings and Credit Unions, loans can also be granted by credit unions.
Banks are able to grant both loans and credits
(Banking law allows), but in practice they mainly grant loans. You can often find the term consumer credit. Under the Consumer Credit Act, any loan agreement granted by a lender as part of his business is treated as a consumer loan. Please note that the lender does not have to be the owner of the money. In practice, banks use the funds deposited with them by their clients. This makes the activity of banks quite characteristic.
A special case is, pursuant to the Consumer Credit Act, any loan agreement granted by a lender as part of his business is treated as a consumer loan, i.e. a separate, particularly regulated type of loan. A loan is a slightly broader concept. It can be provided not only by banks, but also by a natural person who owns money.
The loan is therefore a civil law institution. Each loan is also a loan, but not every loan is a loan. In the case of a loan, the borrower becomes the owner of the money and can freely dispose of it.
The lender cannot interfere in the way they are issued. When taking out a loan, you only get the right to temporarily dispose of cash, i.e. to dispose of it until the time specified in the contract. With this date, the borrower is obliged to repay the loan, usually for a fee called a commission. The subject of the loan may be money or other items (sports equipment, food, etc.).
The subject of the loan is usually cash
In the form of non-cash bank money for a purpose strictly specified in the loan application.
The bank has the right to control the use of the loan throughout its entire duration. If the borrower uses the funds inconsistently with the declared purpose, the bank may request their immediate return. Banks are required by law to examine their creditworthiness before making a decision on granting a loan.
There is no such obligation in the case of granting loans.
The last important difference is the form of the contract. The loan agreement, in principle, can be concluded in any form.
In accordance with art. 720 section 2 of the Civil Code, in the case of contracts with a value exceeding PLN 500, it should be in writing, but this does not mean that failure to comply with this requirement will be equivalent to the nullity of the contract.
Meanwhile, in the case of a loan agreement, in accordance with art. 69 clause 2 of the Banking Act, it should be made in writing and specify, among others parties to the contract, purpose for which the loan was granted, repayment rules and dates, interest rate or commission amount. See below a summary of the most important differences between a loan and a loan: