Frequently asked questions
Does a loan agreement have to be in writing?
The law does not generally require the loan agreement to be concluded in writing. The written format is, however, required in the case of consumer credit, i.e. when a lender grants a loan to a consumer in its economic or professional activities and the consumer pays an interest for using the loan.
Despite the fact that no mandatory written format is prescribed for ordinary loan agreements, it is nevertheless recommended to conclude a loan agreement in writing in order to avoid any possible disputes and ambiguity with regard to the arrangements related to the agreement.
Who can grant a loan?
As a rule, anyone who has the means can grant a loan. If granting loans becomes the economic activity of a lender and loans are granted to consumers, various requirements and obligations will apply to the lender in order to ensure the observance of consumer rights and the functioning of a responsible loan market.
Can only money be lent under a loan agreement?
Although money-lending is usually the main aim of loan agreements, money is not the only thing that can be lent under a loan agreement. Besides money, other interchangeable or replaceable items, e.g. securities, can be lent under a loan agreement.
To whom does the money/thing belong that has been transferred to the borrower under a loan agreement?
When the lender has handed money or things over to the borrower, they become the property of the borrower. The borrower does, indeed, have a contractual obligation to return the money or things (usually with a fee, or interest), but not exactly the same thing – the borrower has to return a thing of the same value or with the same specific characteristic, but it does not have to be exactly the same thing that was handed over to him or her.