Termination of the loan agreement – is it free?

Before you borrow money, you should know under what circumstances you can opt out. The loan agreement may be terminated by both the lender and the borrower – e.g. by mutual agreement. Remember – according to the Civil Code, you have the right to terminate a loan for free within 14 days.

What is termination of the loan agreement?

What is termination of the loan agreement?

Termination of the loan agreement may apply to all products of the financial sector. This is a unilateral declaration of intent, indicating a willingness to terminate the previously concluded loan agreement. It should be in writing. The contract may be terminated by mutual agreement of the parties, on the terms set out in that contract or on the terms set out in the Civil Code.

Termination may be made by the lender. In the case of a borrower, it is the withdrawal from the loan agreement.

When can the loan agreement be terminated?

When can the loan agreement be terminated?

Pursuant to the Consumer Credit Act, every natural person has the right to withdraw from the loan agreement. In contracts for an indefinite period, the lender has the option of requesting a refund at any time. Then the borrower is obliged to repay within a period not exceeding 6 weeks from the date of delivery of the declaration of intent. The parties may, however, agree on a longer period.

Term loan agreements may also be terminated earlier, if both parties agree this before the contract is finalized. The lender may want to break it if two full installments are not repaid, the debtor’s creditworthiness suddenly decreases or the value of the collateral for the debt is reduced.

However, if at the time of signing the contract the lender was aware of the poor financial status of the borrower – it may be terminated only by mutual agreement of the parties. If the payer fulfills the terms of the contract, then there are no legal grounds to demand prior settlement of the obligation.

Usually, a prompt to repay is sent. The debtor must make it within 14 days, under pain of terminating the contract. Otherwise, the lender may terminate the contract with a 30-day notice period. During this time the borrowed amount must be returned.

What are the reasons for canceling the loan?

What are the reasons for canceling the loan?

Both in the case of classic online payday loans and car loans, it is possible to use the 14-day withdrawal period. During this time, you can opt out of the offer without incurring consequences and having to provide reasons for your decision.

Cancellation of the loan does not, however, release the fees for the days on which the customer could use the borrowed amount. After informing the company about your decision, one-time debt repayment is required. Standard costs are charged from the time the notice is given until repayment. If repayment is not made within 30 days – the case may go to court and the borrower may enter the debtors register.

Annex to the contract and change of its terms

Annex to the contract and change of its terms

If the terms of the contract cease to be satisfactory for the client, he does not have to terminate it immediately. In consultation with the lender, an annex to the loan agreement may be drawn up. It can regulate, among others loan duration and amount of monthly installments. Changing the terms of the contract may involve additional fees. However, this is not a cost greater than the amount of any penalty interest in the absence of timely repayment.

The annex may also be a response to changes in law that have occurred during the loan period. If the borrower does not agree to the proposed changes within 14 days, the loan agreement will be terminated within 30 days. In the absence of a written refusal by the borrower, new contract regulations will be introduced.

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