Unfortunately, the complexity of current solutions and the far-reaching formalisation of the bank/customer relationship, directly resulting from the legal system, regulation and control, which contemporary banks are subject to, has led to a situation where we ask ourselves: what is the bank in our times, for whose benefit does it work, who actually administers the funds collected by it, and who supervises it?
The main legal act regulating the loan business is the Law on Financial Market Supervision of the 21st of July 2006, the so-called anti-usury act. By the amendment to the act of the 5th of August 2015, the legislator instituted a range of restrictions and penalties for the entities acting in this industry, which have to be implemented by the loan companies within a specified time. The main changes include:
- defining the form of a lending institution activity: a limited liability company or joint-stock company
- the requirement of a minimum share capital of two hundred thousand zlotys
- additional requirements when establishing loan companies
- setting the maximum annual costs of non-interest loans
Until the changes were implemented, the loan companies had been acting like they were in Eldorado – they had been lending cash from the annual percentage rate (APR) even at a level of 7000%… According to the amendment, the current APR cannot exceed 65% per year, and the total costs cannot exceed the amount of the granted loan. Following the amendment, the market has already decreased by 20 loan entities and this is only the data for the official ones; therefore, it remains unknown how many private enterprises withdrew from the market.
People who suffer financial difficulties head primarily for an institution of the banking sector; however, they belong to the group of high-risk customers and should not count on any help from the bank. In order to save the situation, they fall into a debt spiral, which becomes, after some time, difficult to get out of. On the other hand, everyone can face a random incident, which may lead to financial problems, e.g. a disease or an accident – banks are not interested in solving those people’s problems; therefore, they seek alternative opportunities.
In the case of higher loan amounts, an integral part is to provide an adequate security of movable or immovable property. For the borrower, the safest and most secure form is the lender’s property. The most popular forms of security, dependant on the type of property and the amount of the loan to its value, include:
- the transfer of title to secure loan repayment
- the transfer of ownership
- the mortgage on the property
Contrary to typical payday loans or easy loans, in the case of a private loan, the customer receives a real chance of getting out of debts. Apart from the financial resources, they receive support in creating a safeguard plan and cooperation during the performance. In the case of a repayment failure, every customer may expect a flexible attitude towards their situation, e.g. an efficient solution to the problem with a benefit to both parties or joint selling of the property, and also a return of excess debt cash. Nevertheless, there are situations, which require an intervention by the investor and then, in difficult cases, a debt collection process is started. The first step is always telephone contact or a meeting with the customer. At the next stage, the customer receives a request for payment, and if this brings no positive results, only then an agreement termination notice is sent, calling upon an immediate payment. In extreme cases, the property is sold.
When lending the funds, a lot of companies secure only their interests, forgetting or deliberately ignoring the customer’s needs. Taking over the property for nothing is a common problem, which receives media coverage. Instead, when signing the agreement, the borrower should feel as well secured as the lender. When transferring the title, it is worth making a claim in the mortgage register for a return transfer of ownership at the moment of repayment. When transferring the ownership, it is worth signing a repurchase agreement with the power of attorney for the customer, for the lender’s representation and with a possibility of self-representation before the notary at the moment of loan repayment.
It has to be remembered that not everyone can be helped. Sometimes, the best solution to the problems is the sale of assets and a declaration of consumer bankruptcy. If we want to act ethically and avoid the development of the debt spiral, we should investigate the life situation carefully by analysing the documents and clarifying the current circumstances and possible scenarios. In the case of considering the issue in positive light, an essential aspect is to transfer the funds directly to the creditors, allowing the customer to clear their situation. Following the plan, the customer will be able to recover the property and live peacefully, and the in case of a lack of cooperation and repayment – after all, they will be free from debts, with an amount that is sufficient for a new start.
VFund Sp. z o.o. is one of the companies providing private loans for people in difficult conditions. It combines the capital from individual investors with the described business. Additionally, the company is developing a department specialising in bridging. The idea of the company is an ethical and flexible attitude towards the customer’s situation and providing a plan of recovery. Thanks to cooperation with law firms and agents, the company offers comprehensive services and a fair offer. The investors and shareholders of the company may expect above-average profitability at the passive investing. By understanding the market situation and having a reliable approach, the company, since it was established, has still been dynamically developing, realizing profits of 50%.