What are Selected loan types?
There are many types of loans available on the Polish banking market, in this article, we will outline the top five of them. Credit is a very popular form of borrowing, which is why banks and financial institutions are outdoing each other in expanding their offers. Commercial credit is one of the most common forms of credit.
Contract details, interest rate, repayment length, and credit service costs depend on the offer – the bank dictates the terms. This loan is quite easily available, which is why it is often used by companies wishing to invest in their own development. It also allows small businesses to enter the market.
A foreign currency loan is another popular type of debt
In this case, the debt is incurred in a foreign currency, thanks to which it is possible to significantly reduce the amount of interest, as long as currency markets remain stable. It is common among entrepreneurs who import their products abroad. However, there is always a risk of a collapse in foreign markets, which can severely translate into higher loan costs – a great example is the swings in the Swiss franc exchange rate.
The franc cost slightly over USD 2, which resulted in mass borrowing in this currency. Less than three years later, in 2011 (and also at the turn of 2014/15) the franc achieved the highest rate in history exceeding 4 dollars. This development has led to huge financial losses for people who decided to take loans in this form.
Capital from a bank can also be obtained by sharing ownership
As is the case with a mortgage. The bank provides us with financial support in exchange for the so-called mortgage pledge – a right in rem to movable property (such as a car, television) or real estate (e.g. an apartment, a production hall), established as collateral against possible insolvency of the borrower.
In urgent situations, when we urgently need cash resources, we can go to the pawnshop – there we’ll get a loan pawnshop. It is a short-term form of incurring debt, usually established for a period of one year, which is obtained under pledge (e.g. jewelry, electronic equipment or tools). It should be remembered that the value of the pledge is often higher than the loan amount obtained. If the debt is not repaid, the lender has the right to dispose of the pledged goods.
The last but equally popular debt is a preferential loan. More favorable conditions for obtaining it make it become available to poorer families, farmers or entrepreneurs. Local government units can also apply for this loan –
thanks to it they mainly finance the development of local infrastructure. Money usually comes from governments or the European Union.