What are private loans?

What are private loans?

You have certainly already come across various loan offers. You can get extra money, for example, from a bank or loan company.

But there is another option.

Pursuant to the law, any person (including you) can become a lender.

Loans granted by persons who do not run a business in this regard are called private loans.

A loan is nothing but a contract in which one party undertakes to give the other a specified sum of money (or other things). The shape of such an agreement is determined by the provisions of the Civil Code. Specifically, article 720§1

The loan granting party undertakes through a loan agreement


Transfer to a person taking a certain amount of money or things
marked only as to the species, and the recipient undertakes to return the same amount
money or the same amount of the same kind and quality.

The law also allows for determining the remuneration for the person who grants the loan. These may include, for example, interest and various other fees that arise from the contract.

This construction of regulations resulted in a huge business around borrowing issues . According to IMAS International research “Why Poles are in debt” – in 2018 75% of Poles aged 18 to 64 took a loan or credit at least once in their life. 42% of them think that lending money is something natural as long as it is done knowingly and under the right conditions.

If you only have the right capital – you can borrow money and make good money. You don’t have to set up a special company or bank for this. Simply put – you conclude a contract with the borrower and await the fulfillment of its conditions.

A private loan can have a different nature. This way you can borrow money from family, friends or completely strangers. Private lenders advertise themselves through newspapers, leaflets and on the internet. Everyone can benefit from private loans – even major companies, foundations and other legal entities.

Why people take private loans

Why people take private loans

IMAS International respondents indicate that the primary reason for borrowing money is that they need the thing to be too expensive to buy right away (44%). Another reason is temporary financial problems (29%) and unexpected expenses (27%).

For years, the money lending market was subject to restrictive regulations. The law obliged banks to thoroughly examine their clients’ creditworthiness. The non-bank loan market is also heading in a similar direction. These changes are aimed at limiting the lending of money to people who will have difficulty paying off their liabilities.

The situation is different in the case of private loans. Their functioning is based on the basic principle of economic freedom – that is, the freedom to conclude contracts.

A private lender does not have to check you in the debtors’ databases, assess your financial standing and what you will spend your money on. After all, he has his money and can do whatever he likes with it.

Due to this, private loans are often the only option to obtain additional funds for people who, for various reasons, do not have a chance to get a loan from a bank or loan company.

In addition, freely shaping the loan agreement has one more advantage. In this case, the provisions of the contract are tailored to the individual situation. This means that the borrower can freely negotiate the conditions for obtaining additional funds. In this way, a contract can be created that is satisfactory for both parties.

Do you prefer to use a loan company? Check how to get payday ID for a bank account.

Where to look for a private loan

Where to look for a private loan

Finding a private lender is very easy. After entering the words “private loans” in Google search engine, you’ll find hundreds of websites, forums and websites with offers:

But it is not everything. All you have to do is open any local newspaper on the classifieds page. In addition, you can find information about private lenders on advertising poles and even in your post office box.

How to take a private loan

Okay, but what does getting a private loan look like in practice?

Let’s return for a moment to the provisions of the Civil Code:

A loan agreement whose value exceeds one thousand zlotys shall require
preservation of documentary form.

This paragraph indicates that if you intend to borrow more than a thousand zlotys – the loan agreement must be in writing.

This means that after finding the offer you are interested in, you contact the lender and then sign the contract. Private contracts can take many forms. From a simple page that contains only a few provisions to comprehensive documents.

If you want to learn more – read the article – what should the loan agreement contain.

Carefully read all the provisions of the contract. Do not agree to terms that you do not accept or understand. In this case, you have the greatest opportunity to negotiate – the entire content of the contract depends entirely on your will.

After signing the loan agreement, there is time for its implementation. The lender will give you a certain amount of money, while you will be required to complete your part of the contract.

A person granting a private loan has the same rights to pursue their claims in court as a bank or loan company. This means that if the loan is not repaid, debt collection or bailiff proceedings may take place. Therefore, in the case of late payment of a private loan, you will experience the same unpleasantness as with other financial products.

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