The activities of parabanks are focused on payday loans, i.e. very short-term loans paid out after the borrower’s quick verification. Payday loans is one of the most interesting products on the domestic credit market. In the article you will learn the most important features of payday loans, key legal standards for signing a similar contract, conditions for obtaining a short-term loan, as well as the most important elements of parabank operations.
Key features of payday loans
Payday loans is a short-term loan. Applies to weekly, bi-weekly, monthly periods, rarely longer. Payday loans is often a common name for consumer credit. The most common payday repayment terms are 14 and 30 days with a one-off extension (paid or free). After amendments to the Anti-usury Act, most parabanks will probably give up payment extensions for reasons of profit maximization. Payday loans rarely requires entering security measures into the contract. Many parabanks also leave the payday insurance.
Parabank practices in granting short-term loans
It is assumed that non-bank institutions mainly support borrowers rejected by retail banks, which naturally increases the risk of cooperation. Loan companies have a slightly different approach to serving an uncertain customer. This means that they propose to set up a dedicated account on the website with payday loans and ask for confirmation of credibility through a regular transfer. Then the parabank customer receives payday payday in limited amounts. It is usually PLN 100-500. A new customer builds credibility by repaying obligations on time. At the beginning, the borrower raises small amounts, but over time the situation changes in favor.
Who is the parabank customer most often?
Borrowers in parabanks are usually characterized by a deteriorated situation in the Credit Information Bureau, as well as arrears in bill payments. However, the customer profile of parabanks has changed a lot in recent years. The client of the parabank is no longer a financially excluded person with bailiffs, but a young man with medium or low but regular earnings. Payday loans is a short-term solution, however, in terms of costs and risk, it is very beneficial, especially when planning a vacation, additional specialist treatment, minor renovation or major family shopping. The payday loan does not charge the household budget as much as possible. The payday loans are referred to in the Consumer Credit Act (information standards, including the presentation of the APRC – the actual annual interest rate), as well as the Anti-usury Act and the Civil Code. Now in payday loans, the legislator has reduced non-interest costs to very fair levels. Therefore, a short-term cash loan does not negatively affect the functioning of households. What do you think about payday loans?