The need to obtain quick cash distracts them from the agreement, which may contain provisions on payment reminders that the company will send if Kowalski fails to repay the loan on time. Many people claim that this is encouraged by the free loan offered by companies to new customers. We invite you to read the full material, which shows what costs may be incurred by someone who approaches the subject of payday loans irresponsibly.

Hundreds of loan companies across Poland

The growth in the number of so-called parabanks is alarming. Just three years ago, there were only 10 such companies. Today, their number is increasing day by day. Among the best-known ones, there are more than 70 companies.

Most of them operate via the Internet, granting loans remotely. Companies have developed various methods of verifying customers to ensure the enforceability of signed agreements. At a bank, such procedures take approximately 1–2 days. At a loan company, money can arrive in as little as 15 minutes.

Ways of granting payday loans

The companies’ methods are very simple. Usually, a person who wants to borrow a small amount registers on the loan company’s website. They enter their personal details there and later confirm them with a bank transfer sent to the loan company. Companies require applicants to provide the amount of their income, which they later verify by calling the employer. At subsequent stages, the BIK, BIG and KRD registers are checked, as well as whether the loan applicant pays their electricity, water or telephone bills on time. A person who passes the verification receives the money quickly, which is tantamount to signing the agreement (sometimes the company sends it by post for signature, but this also happens only after the money has already been paid out).

According to many people, such practices mean that the customer effectively has no time to read the agreement. They usually read it only after some time has passed, when repayment problems arise.

What fees can a loan company charge us?

Penalty interest is a normal measure used by both companies and banks. However, it is modest, usually amounting to four times the NBP lombard rate. The most severe penalties, however, are payment reminders. Their purpose is to remind the borrower to repay the loan taken out. These reminders cost approximately PLN 100–200 on average. Companies may send such notifications electronically, by SMS or by registered mail. This depends on how a given company operates. A customer who has not gathered enough money for repayment may extend the loan for another period. Such a fee usually ranges from 10% to 40% of the loan amount.

A recently published report by the Federation of Consumers states that a payday loan normally costs Kowalski approximately 20–40% of the loan amount. In extreme cases, when a person fails to meet their obligations for three months, they may pay as much as 100% of the borrowed principal.

In conclusion, it can safely be said that taking out a payday loan without reading the agreement beforehand is extremely dangerous and exposes the borrower to high penalties and fees. It is best not to use them, but if someone has no other choice, they should carefully study the agreement of each company and choose the one with the lowest fees for payment reminders or extensions.

The subject is so sensitive for many people that, as loan companies emerge, organizations are also being established to help people indebted through products such as payday loans. Indebted people can find a great deal of useful information and advice from them—free of charge.

You can find more information on the organization’s website—Stowarzyszenie Osób Ubogich i Zadłużonych