•   Wednesday, August 17, 2022

Credit agreement - do you know what you are signing?

At work, at the shop, in the office and in the bank - every day in each of these places we conclude written or oral agreements, filling in fields, boxes or simply paying for specific products or services. However, it is difficult to imagine making a commitment such as a cash or mortgage loan without signing a contract guaranteeing the safety of our finances.

Security guarantor

A contract is, in short, an agreement of two or more parties, setting out both the rights and obligations of each of them. Failure to perform the service correctly or to meet the obligations within the prescribed period may result in early termination of the service. An unspecified document that we seal with our name may cause us a lot of trouble, e.g. oblige us to pay gigantic interest or even make it impossible to assert our rights in court.

When deciding on a cash loan, it is therefore worth choosing a bank that enjoys widespread trust and has clearly defined credit rules.

What should the credit agreement contain?

  • Details of the lender (possibly intermediary) and borrower;
  • Duration of the loan;
  • The total amount of credit;
  • Type of credit and rules for repayment of liabilities (including the instalment settlement cycle);
  • The interest rate of the loan, as well as the conditions for its change;
  • Information about other costs that the consumer will be required to pay, such as fees, commissions and margins;
  • RRSO, i.e. the Real Annual Interest Rate;
  • Conditions for termination of the contract by either party;
  • Consequences of failure to make timely payments;
  • Interest rate on overdue debt;
  • Information about the right to early repayment of debt, collaterals and additional agreements.

Lack of any of the above points in the contract should cause the warning lamp to light up in the head.

The credit agreement must be drawn up in duplicate. The creditor shall provide the borrower with a signed document together with all possible attachments specified in the agreement. For your own safety, please remember never to sign forms confirming that you have read any regulations, registers or tables, if such forms have not come into our hands.

It is worth knowing that even in the case of a credit agreement, the consumer has the right to withdraw from it within 14 days without giving any reason. Although the bank is not allowed to impose additional withdrawal penalties during this period, the consumer must pay the amount of interest collected from the date of disbursement to the date of repayment of the credit.

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