Reading contracts carefully and understanding their terms is a key factor in your loan success. This will allow you to avoid fraud, better enforce your rights and the concept of the entire loan process. In fact, the loan agreement should contain all the details that relate to or may relate to the borrower in the future (a discussion is available in the article ” What should a loan agreement look like?”). One thing that the borrower overlooks is usually the duration of the loan agreement. Let’s look at what entries regarding the duration of the loan usually find place in the loan agreements.
The loan term is not the repayment period
The majority of borrowers assume that the contract lasts as long as the total repayment period and ends, especially if it concerns the installment loan, together with the repayment of the last installment. Yes, it will, but only if the lender regularly and diligently repaid his liability. If the repayment of the last installment takes place on time and according to the schedule, then the duration and validity of the contract with this schedule will actually cover.
However, this is not always the case, and some lenders sometimes pay back the loan well after the deadline. In this case, the contract will in no way lose its validity. Therefore, it is assumed that the final day of the contract is full repayment of the loan.
Even if during the term of the contract, either party – the lender or borrower – receives a notice of termination, the contract is legally valid. It should be noted here that important means that it can have legal effects, so it will also occur if the borrower withdraws from the loan agreement and does not repay the entire amount.
Business practice – how long is the contract concluded?
The duration of the contract is also neglected by the loan companies and they do not always recognize that it is worth placing a record about how long it will last. They acknowledge that this is an issue that can be inferred from the law, so it is unspoken but implied information. Despite this, the borrower is still in force and in the event of any misunderstanding the general rules apply.
The lack of information about the duration of the contract does not affect the rights of the borrower and in no way negatively affects his situation and there can be no consequences. So you should not be afraid of it, because in no case does it indicate fraud or attempted deliberate harm to the client. It is worth noting that in each loan agreement, the last paragraph usually includes the sentence “In matters not covered by
Contract duration and limitation
As we wrote earlier, the loan agreement is valid until the loan is repaid in full. However, this only happens if the loan repayment is due and can be enforced. Payment requirements may overturn the court order or the statute of limitations on the debt. The one for loans concluded for a definite period (i.e. for so-called term benefits) is 3 years. If during this time neither party takes action to recover the debt or its repayment, the loan will not be due and will cease to apply.
However, if these actions are taken, e.g. the lender will actively recover or refer the case to court, the limitation period will be interrupted. So it can happen that the debt will be payable up to several years and the loan agreement will be the same. It should also be remembered that for a loan agreement concluded for an indefinite period, the debt will expire only after 10 years (“new” 6 years of limitation applies only to claims between consumers).