LENDING INSTITUTION

Consumer loan documentation

We advised the lending institution on the following project:

DEVELOPMENT OF A SET OF CONTRACTUAL DOCUMENTATION FOR A LENDING INSTITUTION OFFERING CONSUMER LOANS

  • The consumer loan product is strictly regulated under the Consumer Credit Act. The regulations require the lender to meet a number of requirements at the pre-contractual stage (e.g., to assess creditworthiness, provide comprehensive information about the product offered on the information form) and the contractual stage.
  • A consumer loan agreement should clearly and comprehensibly specify the elements indicated in the Act (e.g., total loan amount, loan repayment terms and dates, interest rate, consequences of non-payment, etc.). In the case of more complex products, it may be difficult to present all the required information in a manner that is comprehensible to consumers. Importantly, if the lender violates certain obligations under the Act, the so-called sanction of free credit may be imposed (the consumer will have the right to return the credit without interest and other credit costs).
  • Maximum non-interest loan costs are one of the key areas governed by the loan agreement. The lender should determine which costs incurred by the consumer are associated with the loan agreement and whether the sum of such costs exceeds the permissible level. The fees charged to the consumer are also subject to evaluation for the so-called abusiveness so they need to be developed appropriately.

The advisory services of DLK Legal with respect to such projects mostly include:

  • development of specimen loan agreement/rules for granting loans
  • development of specimen information form adjusted to the loan offered
  • development of specimen statements/consents to be given by the consumer when applying for a loan
  • audit of consumer costs in terms of their regulatory compliance

Lawyers involved in the project:

Szymon Zych
attorney-at-law, partner Szymon Zych

Mikołaj Cegłowski
attorney-at-law, senior associate Mikołaj Cegłowski

Retail

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