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Withdrawal or termination of the loan – what are the differences?

The loan agreement is drawn up when the lender gives away part of his property to the borrower. At financial companies and banks, the subject of this commitment is cash. However, the rules do not specify the specific subject of the loan.

What does the loan agreement look like?

What does the loan agreement look like?

The borrower undertakes to return the borrowed capital. The loan becomes his property. Of course, interest and additional fees may be added to the amount incurred. Importantly, the loan agreement belongs to the category of consensual agreements. This means that to conclude it effectively, a consistent statement by the parties is necessary.

The loan agreement must include such elements as:

  • date and place of conclusion of the contract,
  • parties to the contract,
  • the subject of the contract,
  • loan repayment conditions,
  • conditions for terminating the contract,
  • withdrawal from the loan agreement,
  • property declaration,
  • consequences of late repayment of the loan,
  • signatures of both parties.

The letter must contain a withdrawal from the loan agreement within 14 days of its conclusion – the consumer has the right to withdraw from the agreement at that time.

However, the termination of the loan agreement is a statement by the lender on what terms he wants to receive a refund. It can be done in three ways: by mutual agreement of the parties, on the terms set out in the contract or the principles set out in the Civil Code.

What does it mean to withdraw from the loan agreement?

What does it mean to withdraw from the loan agreement?

One of the consumer rights guaranteed in the Consumer Credit Act is the option to apply for a consumer loan. According to art. 3. According to art. 3 of the Act, a consumer loan may be a loan of not more than USD 255 550 or the equivalent in foreign currency. A consumer is a natural person who performs a legal act unrelated to his professional and business activity.

The conclusion of a loan contract by a consumer is such legal action. The borrower who is the customer has the right to withdraw from the loan agreement within 14 days from the date of the contract (the date of the contract is not included). It is very important to make sure that this deadline is over because after that it is no longer to exercise this right.

It is important that the withdrawal from the loan does not require the borrower to justify such termination. The possibility of withdrawing from the contract applies to both contracts concluded with the bank, loan companies, private individuals in our home, or online loan contracts.

The lender status does not matter, we always have the right to withdraw from the loan agreement. The option of withdrawing from the committee should be included in a written contract with the lender.

How to write a request to withdraw the loan agreement?

How to write a request to withdraw the loan agreement?

In order to withdraw from the loan agreement, an appropriate statement should be submitted, the model of which the borrower is obliged to provide the consumer with the conclusion of the contract, on a durable medium. However, if the creditor does not comply with this obligation, it is easy to make a statement yourself or use a ready-made template.

The application for withdrawing from the loan can be downloaded from the website of the loan company, bank or other financial services. It does not have to include the reason why the consumer has withdrawn from the contract. A properly constructed template should include the name of the entity that granted the loan and the address of its registered office, as well as the details of the borrower.

All you have to do is fill out the model statement attached to the contract and then deliver it to the address of the lender. The statement can also be sent by post. Choose the type of letter to have confirmation of posting and possibly receive a return receipt.

If you send the letter, the date on the envelope’s stamp counts, not the date of delivery to the recipient.

How much does it cost to withdraw from the loan agreement?

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In the event of withdrawal from the loan contract, the consumer will, of course, have to pay the borrowed capital. But will the consumer have to pay extra for the loan?

Pursuant to Article 54 of the Consumer Credit Act, the borrower shall not bear the costs associated with withdrawing from the consumer credit agreement. However, the exception is interest on the loan for the period of payment of the loan up to its repayment. The borrower has 30 days to repay the amount of the liability and interest, counting from the date of submission of the statement of withdrawal from the contract.

What if we exceed the 30-day deadline? In this case, the statement is treated as legally ineffective. The consumer will be required to repay the loan according to a predetermined schedule. If you have noticed that the contract is not favorable, it is worth withdrawing from the loan contract.

The good news for the borrower is that he incurs no additional costs except borrowed capital and interest. The Act discussed earlier makes it impossible to charge other costs related to the client’s withdrawal from the concluded contract.

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