Borrowing money is a difficult topic. Where do we most often borrow? Mainly from banks and non-bank companies, as well as from family or close friends.
However, the trend of borrowing money from strangers within the sphere of social lending is slowly developing in Poland. It includes social loans. What are they and is it worth using them?
What are social loans?
Social loans are an alternative to payday loans granted by non-bank loan companies as well as for cash loans in banks and cooperative savings and credit unions. It should be said that a social loan is neither a cash loan nor a loan granted by a company as part of a business activity.
What is it then? A social loan, in other words, a social loan or social lending, consists in concluding a loan agreement directly between natural persons. This is a loan in the form of a civil law agreement, the subject of which is a specific amount of money granted by a natural person to another natural person.
One of the parties (the lender) undertakes to make available to the other party (the borrower) a certain amount of financial resources on specific principles regarding the interest rate on the loan and the date of its return.
What is the difference between a loan and a social loan? Social loans are the main element of the social lending sphere. They are not subject to any supervision by external institutions, they are not subject to the provisions of the Banking Law or recommendations of the Good Finance Investment Corporation, as in the case of banks.
Online social loans – where to look for social loan offers?
The easiest way to get a social loan is on the website created for this purpose. There are social lending platforms on which online social loans are provided.
The websites indicated on which you can find offers for social loans are not lenders. The loan is granted by a natural person to a natural person, while the social lending platform performs only the function of an intermediary who associates two parties to a civil law contract.
An online community loan will be available on lender and borrower platforms after the two sides agree on the loan terms.
The mentioned social lending platform is Good Finance, which is intended only for investors. Loans are granted by non-bank companies that give their shares to private investors.
How do social loans work?
When we want to take out a social loan, we really need to sign (enter into) a contract between private individuals. There is no brokerage on the part of banks and non-bank institutions or financial supervision, although there is an intermediary in the form of a social loan platform that associates the parties to the transaction.
It connects people who need to borrow additional funds with people who are ready to grant such a social loan on certain terms. Social lending services facilitate the conclusion of such transactions using appropriate tools.
These tools also help to recover money if the borrower refuses to pay back the interest and refunds.
Rules governing the provision of social loans
The legal basis for granting social loans are the provisions of the Civil Code regarding loans as such. In the code, loans are devoted to section XIX, from art. 720 to 724.
What are the conditions and requirements for getting a social loan?
The condition for receiving a social loan is to find a bidder on the loan platform who decides to grant the loan on the terms indicated by the client. Usually, the requirement is to register the borrower on the selected portal and verify his identity.
There is no need to undergo painstaking verification of creditworthiness and creditworthiness, as is the case in banks and in an increasing number of loan companies.
Verification of people applying for a social loan
A very important step in applying for a community loan is to verify the identity of the potential borrower. It aims to confirm that the person entered in the loan application is actually who they claim to be.
In the case of social loans, verification is carried out by means of a verification transfer or services such as Good Finance.
In many cases, voluntary verification is possible to increase the customer’s creditworthiness. It may consist of:
- confirming the address by attaching a utility bill,
- consenting to check data in economic information bureaus,
- providing a certificate on the amount of remuneration and employment.