Checklist Before Taking a Loan

A Loan Is a Multi-Year Commitment — Prepare Properly

A mortgage is 20–30 years of payments. A cash loan — from several months to several years. In both cases, you're signing a commitment that will affect your finances for a long time. One bad decision — too high interest rate, too large amount, wrong timing — can cost tens of thousands of PLN.

This checklist will help you make an informed decision and avoid the most common traps.

Step 1: Do You Really Need a Loan?

Before you start comparing offers, ask yourself fundamental questions:

• Can I save up and buy with cash? — a loan for a TV, vacation or phone is a bad idea. A loan for an apartment — justified.
• Is this a good time? — interest rates, your employment situation, the market.
• How much will I actually pay? — sum of interest over the entire loan period, not just the installment.

Rule: Loans make sense only for assets (apartment, education, business) or in emergency situations. Consumer loans are almost always a bad choice.

Step 2: Check Your Creditworthiness

What Do Banks Consider?

• Income — stable, documented. Employment contract > B2B > contract work.
• Credit history (BIK) — payment timeliness, number of inquiries.
• Current obligations — every active loan reduces capacity.
• Age — affects maximum loan period.
• Marital status and number of dependents — more people = lower capacity.
• Contract type — permanent employment contract is the gold standard.

How to Improve Capacity Before Application?

• Pay off small loans and credit cards
• Reduce limits on cards (even unused ones lower capacity)
• Don't submit multiple applications at once (each BIK inquiry lowers scoring)
• Get a BIK report and check for errors
• Stabilize income — avoid changing jobs 6 months before application
• Wait until probation period ends at new job

Step 3: Understand Loan Costs

Interest Rates — Fixed vs Variable

• Fixed — rate doesn't change for a set period (usually 5 years). Security.
• Variable — WIBOR + bank margin. Rate rises and falls with the market. Risk.

With variable rates, calculate what the installment would be if WIBOR rose by 2–3 percentage points. Can you still afford the payment?

APR — The Only Honest Cost Measure

APR (Annual Percentage Rate) includes:

• Nominal interest rate
• Bank commission
• Insurance
• Other fees

Compare offers by APR, not by installment or nominal interest rate.

Hidden Loan Costs

• Commission: 0–3% of loan amount
• Life insurance: often "voluntary" but reducing margin
• Property insurance: mandatory with mortgage
• Low down payment insurance: if down payment < 20%
• Property valuation: 300–800 PLN
• Tied sales: account, card — check what they cost after promotional period
• Early repayment: does the bank charge commission?

Step 4: Compare at Least 3 Offers

Don't take a loan at the first bank you visit. Differences can be huge:

Example: Mortgage 400,000 PLN for 25 years:

• Bank A: 2.0% margin — total interest cost: ~290,000 PLN
• Bank B: 2.5% margin — total interest cost: ~340,000 PLN
• Difference: 50,000 PLN for the same loan amount!

Where to Compare?

• Comparison portals (Comperia, Bankier, Rankomat)
• Independent loan advisor (free — earns commission from bank)
• Directly at banks — online and in branches

Step 5: Checklist Before Signing Contract

• I read the ENTIRE contract (not just the first page)
• I understand early repayment conditions
• I know what happens if I lose my job
• I checked if insurance is mandatory or "optional"
• I know the payment schedule
• I have a financial cushion for 6 months of installments
• Installment doesn't exceed 30–35% of my net income
• I understand difference between equal and decreasing installments
• I know when I can refinance

Equal vs Decreasing Installments

• Equal (annuity): constant installment amount. Convenient, but more expensive overall.
• Decreasing: higher installments at start, lower at end. Cheaper overall, but tough start.

For a 400,000 PLN loan over 25 years, the difference in total cost is 30,000–50,000 PLN in favor of decreasing installments.

What NEVER to Do

• Don't take payday loans — APR reaches hundreds of percent
• Don't lie on application — it's a crime and risk of immediate payment demand
• Don't take a loan to pay off a loan — debt spiral
• Don't ignore installments — debt collection, BIK, bailiff — consequences are serious
• Don't sign without reading — every clause matters

How Freenance Can Help

A loan is a multi-year commitment. Freenance helps you manage it wisely:

• Installment simulation in budget — see how a loan will affect your finances
• Payment tracking — how much you've paid, how much remains
• Capacity analysis — based on your real income and expenses
• Early repayment plan — save on interest

Make a loan decision based on data with Freenance. 🏦