Termination of the loan agreement is sometimes understood as a withdrawal from the loan agreement. However, these issues differ quite significantly. To what extent – about this later, but you need to know that both issues are inseparably connected with the loan agreement and can fundamentally affect the situation of people who decide to take out an online non-bank loan.
Termination of the contract and withdrawal from it
As we have already mentioned, both these terms are treated unequivocally, although no equal sign should be placed between them. Withdrawal from the loan agreement is the right due to the borrower as a consumer, given to him under the Consumer Credit Act. According to this provision, signing a loan agreement via the Internet guarantees the customer the opportunity to change his mind within 14 days without giving any reason. The legislator’s intention was that such a borrower could in practice test a product that he could not reliably assess at a distance. The lender can therefore terminate the contract without incurring any consequences.
However, the contract is terminated during its duration, not necessarily during the first 14 days, and in practice it can only be announced by the loan company (because these are usually the contract’s provisions) in certain situations, mainly related to breach of contract or failure to fulfill its obligations , i.e. not paying back the loan.
Denunciation and legal issues
The provisions stipulate that the right to terminate the contract applies only when the loan is granted for an indefinite period, which usually fulfills its task in occasional and family loans. They only confirm the mere fact of borrowing money, but they do not specify exactly when the loan should be returned. In such a case, the law protects the lender and recognizes that he may opt out of the loan with a 6-week notice period and he does not need to have a specific reason. If this happens, the borrower must repay the entire loan amount within this time.
Termination loan termination?
If the loan has been borrowed for a specific period of time and the lender is perfectly aware of the repayment date (and this is stipulated in the contract), then the right to terminate the contract is generally not available to the lender. This is good for the borrower – after all, he is preparing to repay the loan on a specific day and may not be prepared for early repayment, which would result from the lender’s arbitrary decision. Therefore, a non-bank institution cannot arbitrarily require early repayment.
Termination of the installment loan agreement
However, loan companies want to leave room for maneuver and use the so-called “contractual right to terminate the contract”. They are admissible as long as the loan agreement contains provisions, in which cases this can be done and if both parties agree. So before signing the contract, it is worth checking whether there is such a record in it – it is natural that if we sign a loan agreement, we agree to all the terms of the lender
When can the contract be terminated?
The lender may terminate the contract if:
- has grounds to believe that the creditor’s credibility has been undermined
- the borrower’s position suggests that the chance to pay back the loan is falling
On the basis of this, the lender can determine for himself in which cases such termination may occur and at least several reasons can be taken into account, but practically all loan companies mention only two such situations:
- loan defaults
- blatant lies on the part of the lender (e.g. if in the application he lied about his income)
For this reason, termination is most often due to installment loans. If the lender does not repay the installments and the lending company’s admonitions do nothing, the lending company has the right to terminate the contract.
Warning! If the loan company indicates in the contract that it has the right to terminate the contract unilaterally and the repayment is due even if the customer repays the installments on time, then such contract should under no circumstances be signed, and it is even worth reporting such a contract to UOKiK.
What are the consequences of termination?
In such a situation, the loan company will demand repayment of the loan within the prescribed period, even if the loan was for 24 installments and the borrower repaid only a few of them. It is not specified by law when the full loan and costs due should be paid back. This term is specified by the company itself and should be included in the loan agreement. Usually it is 30 days from the date of termination.
Failure to comply with this requirement will result in a debt that may be recovered and then transferred to court and bailiff proceedings. Another legal consequence that results from the termination of the contract related to the lender’s lie is that the loan company can report a phishing scam to the police.