With non-interest loan costs it is a bit like buying with sales. Yes, there are real bargains and big discounts, but most of them are either second-class products, which in principle cost less, or goods with previously artificially high prices, which aims to give the impression of a greater reduction.
At first you might think that non-interest loan costs are those that are hidden from us, written in the contract in a small print – called legal tips .
Non-interest loan costs – what does it consist of?
Meanwhile, such costs are nothing but all kinds of fees associated with starting cooperation with a bank or loan company. There are both when you take out a loan as well as a loan or payday loan. As the name suggests, only interest is not included in the group of these payments.
Therefore, the list includes administrative fees (for the verification of loan applications), margins, commissions, fees related to loan insurance, etc. Interestingly, in the loan sector since 2015, non-interest costs also include payments that the customer must make if he has decided on the option of home loan service or extension of the repayment deadline. This is why many companies have opted out of sharing this opportunity because it has become unprofitable.
For more information on this topic, read WHAT IS THE REFINANCING OF A LOAN?
Breakdown of credit costs
In order to gain full knowledge about the fees we will be obliged to pay in connection with taking out a loan, we must learn more about the distribution of credit costs. The first group is those related to the nominal interest rate, the second is non-interest costs, the final amount of which depends on the individual price list of each lender. The maximum ceiling for interest imposed by financial institutions is governed by the Civil Code (Journal of Laws 1964 No. 16 item 93), specifically Art. 359 § 2 , responsible, among other things, for determining the upper limit of nominal interest.
Thanks to it, we can be sure that, for example, the interest rate on our bank loan will not be higher than twice the sum of the value of the NBP reference rate and 3.5 percentage points, i.e. (as at 19/03/2019) 10% per annum.
This is important information because it allows us to plan the budget taking into account the possible increase in interest rate, without unnecessary, unpleasant surprises. Similarly, the issue of non-interest loan costs was regulated by the amendment to the Anti-usury Act, i.e. the Act amending the Act on financial market supervision and certain other acts (Journal of Laws 2015 item 1357). Once there was no way to control them, which was often used by old companies that bore usury, pulling customers on further fees in the form of commission or insurance. Currently, at least in theory, such tendencies have been curtailed. How? Keep reading.
What are the maximum non-interest loan costs?
Hearing the stories of borrowers who did not read in the contract points about additional costs, you can really prejudge this form of obtaining money. We remember, however, that we are partly guilty of ourselves, because we decide to cooperate with financial institutions without knowing about the rules prevailing in the world of finance. Sometimes we don’t even want to read the documents we sign, which then causes our account to suffer. Therefore, is the responsibility for the costs incurred only on the side of the clients?
To prevent dishonest lenders (yes, there are still) from practicing on the verge of the law, in March 2016 the law introducing the maximum ceiling for non-interest costs entered into force. This is a response to, among others, repetitive situations when customers decided to take loans at a low interest rate and then paid sky-high amounts for granting them. The Act guarantees borrowers that there is no risk of having to pay back, for example, twice the amount of the original loan amount. Blockades were imposed on various product variants offered by banks and loan companies. Both the amounts of liabilities and their repayment periods are not insignificant here.