What is a loan and how is it different from borrowing?
When searching for a loan or reading information from the world of finance, we can often meet the term loan. What is the exact meaning of this word and exactly how does the loan differ from the loan or borrowing? We will try to answer basic questions about these terms in the following lines.
Putting a loan into the Civil Code
While in 2013 the classic denomination loan was commonly used in the Codebook, the terminology was changed from January 1, 2014 and the concept of loan was defined in the Civil Code. However, the meaning of this word has not changed in comparison with the previous situation – it is still an act of contracting someone to lend you money – so all bank and non-bank loans fall under the term loan. In practice, the loan is used primarily in connection with financial loans, but it may also be other things – according to the exact definition of the word may be borrowed, for example, various crops or raw materials – that is, matters where their number, or weight or rate . A loan agreement does not always have to be in writing, but perhaps an ordinary oral form is also possible. Similarly, a contract may be both for consideration and non-repayable. For the current version of the relevant lending regulation under the applicable Civil Code.
The difference between a loan and a loan
At first glance, it may seem that it is the same, but it is not. The loan is, according to the valid Civil Code, an act where a specific thing is lent (movable and immovable), which can then be used by the other party free of charge for an agreed period of time. It is not about money, but about objects or real estate. What is important – the thing is left to use free of charge and only temporarily, and so-called non-usable thing must be (under the law it is a thing where its normal use does not consist in its consumption, processing or disposal).
Which companies are lending?
Loans can be provided by banking and non-banking companies and hundreds of different providers can be selected on the Czech market. It is important to choose them carefully, because besides trusted and reputable companies, we can also meet fraudulent companies or individuals who offer loans.
Loan from individuals
In addition to lending companies, individuals can also lend. They also have two options – that is, a loan for rent, where you have to pay interest, and the loan is not repayable, for example, when a friend lends you money. The contract can be concluded not only in writing, but also in oral – but if you want to borrow someone’s money, it is definitely better to have a written contract or at least a debt note. If you are unsure of how such a contract is written, you may want to consult an experienced professional or use some web services to find the exact contract.
Loan maturity and its termination
Section 2393 of the Civil Code stipulates precisely how this is with the termination of the contract. If neither the date on which it is due to be returned nor any notice of termination is included in the loan agreement, a period of six weeks is provided. If it is an interest-free loan, the borrower has the right to repay it without notice.