Especially for small amounts, it is common practice to borrow money from your immediate family. Not only that, usually there are no fees associated with this, which we would have encountered in banks or loan companies, but we can count on greater understanding in the event of failure to repay within the prescribed period. Unfortunately, not everyone can count on receiving this type of support. However, there is one still relatively unknown but systematically growing alternative – social loans. What are they and do they pay off? Are there social loans for those in debt and social loans for companies?
What are social loans?
Social loans are loans granted by private individuals who do not run a loan company or parabank. By law they are treated the same as loans from a family (excluding the issue of tax on civil law transactions, which will be discussed later in the article) or friends. Therefore, although they are subject to the principles of the Civil Code, there are no specific regulations regarding them.
People granting and looking for social loans find each other, among others, through auction websites and special platforms designed for this. The exact terms of the loan are agreed individually by both parties.
The borrower must confirm his identity. He also has the option of choosing evidence of financial status, such as a bank statement.
How do you get a community loan?
Just register on the right portal and then confirm your identity. Thanks to this, we should get access to ready loan offers from various lenders, as well as the possibility of creating our own ad, containing the loan terms we are interested in. Once we have chosen the right offer or the interested investor returns to us, all the exact conditions for granting the loan are determined individually. Thanks to this, it is possible to adjust, among others, the loan amount, repayment date and related fees to both the lender’s expectations and the borrower’s options.
Social loan agreement – what should it look like?
You can (although it is not recommended) to abandon a written loan agreement with family members or friends and only enter into an oral contract. Although in theory this is also possible for social loans, it should absolutely not be done, because it can later result in a number of different problems. The agreement will protect the interests of both parties, which are completely foreign to each other and cannot be mutually certain of their credibility. However, for a social loan agreement to be truly valuable and useful in the event of any problems, it should include the following:
- date and place
- lender and borrower details
- amount borrowed
- date of refund
- method of transferring funds (including bank account number, if it is a transfer)
- loan terms (interest rate, security, penalties for late repayment).
To be valid, the contract should be signed by both the lender and the borrower.
Social loans for those in debt – are they possible?
Are there social loans for those in debt? Yes, because most private lenders do not require any information from borrowers regarding their debt levels, and they also do not have the option of checking out potential borrowers in the credit database themselves. They may require the borrower to request the credit report about him and then provide it to the lender. Social loans without credit history are the best solution for those in debt (the obstacle is not even being subjected to bailiff’s execution). However, they involve considerable risk for the person granting the loan, and therefore additional security may be required.
What do you need to look for when taking social loans?
As already mentioned, social loans are not strictly regulated. Therefore, you can meet among them with a large variety. When choosing a loan offer, we should pay attention to the following factors:
- costs (interest, initial fee, commission for the platform)
- security method
- creditor credibility.
It is worth using first of all the services of people, about whom we can already find some opinions – in this way we will make sure that they are trustworthy, and not, for example, try to steal our personal data.