Credit and loan - see the differences

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In colloquial language, the terms credit and loan are often used interchangeably. However, in practice, credit and loan agreements are not clear-cut - they differ in terms of rules, legal basis, and by which entities they can be granted. What is the difference between a loan and a loan? We explain.


The loan agreement is governed by the provisions of the Civil Code. Pursuant to Art. 720 par. 1 of this act, concluding an agreement of this type "the borrower undertakes to transfer to the taking of a certain amount of money or items marked only as to the species, and the borrower undertakes to return the same amount of money or the same amount of items of the same species and quality"The provisions do not impose a form of contract on the parties - it may even be oral - provided that it concerns a value lower than PLN 1,000.

As indicated in the above provision, the subject of the loan agreement may be money or things, in the case of the latter, however, the condition is their specification as to the species. This means that this type of contract may relate to things specified by features relating to a larger group of products - without a doubt, you can include, among others, gasoline, grain or coal. On the other hand, the subject of the loan agreement cannot be an item marked as to identity - that is, certain specific features, peculiar only to it. An example is e.g. a car with a specific registration number (but not just any car that fits in a given species).

Loans may be granted by both natural persons and legal persons (including banks). It does not matter whether the natural person concludes the contract as a private person or as part of the company he runs. Importantly, the borrower does not have to specify the purpose for which he takes the loan, while the lender cannot control what the funds are intended for. The purpose may or may not be included in the contract.

It depends on the arrangements of the parties to the contract whether the loan will be provided against payment or free of charge. It usually depends on the relationship between the parties (e.g. family, friends) and is not regulated by any regulations.

The basis for securing the loan agreement may be a surety, promissory note, voluntary submission to enforcement, pledge or registered pledge.


In the case of a loan agreement, the relevant Act is the Banking Law. According to it, a loan agreement is defined as a situation where the bank undertakes to make available to the borrower for a specified period of time in the agreement, a specific amount of cash for a specific purpose. On the other hand, the borrower undertakes to use it on the terms specified in the contract, to return the amount of the loan used together with interest on specified repayment dates and to pay a commission on the granted loan.

The loan agreement must be concluded in writing - otherwise it is invalid. So, unlike a loan, any verbal agreement is irrelevant in this situation.

The subject of the loan agreement may only be a specific amount of money, precisely indicated in the written document. Moreover, only the bank can grant the loan.

The loan agreement is always payable. For the transfer of funds to the borrower, the bank demands remuneration, most often in the form of interest, repaid together with the installments of the capital itself. Importantly, the loan is a special-purpose agreement - i.e. the funds received from the bank must serve a specific purpose, also specified in writing in the documentation. The bank can control what the money is actually spent on.

The loan agreement is secured - in practice, the most commonly used is a mortgage, bank guarantee or letter of credit, less frequently bills of exchange.

Credit and loan - summary

So, as you can see, the loan agreement and the loan agreement are two completely different concepts. The former is less formalized and more often used in more private relations. On the other hand, the second one, regulated very strictly by regulations, may be used in certain cases - e.g. a mortgage or a working capital loan.