At present, payday loans and credits in foreign currencies are not so commonly found. Years ago, however, they were very popular, for example in the case of payday loans. Can we still take out a payday loan in a foreign currency now? Is it profitable? What are the advantages and disadvantages of such payday loans?
Foreign currency payday loans and payday loans is an interesting proposition, but it has its drawbacks. We can take them, among others, in Euros (EUR), Pounds (GBP), Swiss Francs (CHF) or in Dollars (USD).
Products of this type were eagerly chosen a decade ago by people who want to build their home or buy a flat. At that time, they were most often provided, which, due to low interest rates, made it easier to get credit than in zloty. Now, probably everyone knows what the situation of “frankkowicz” looks like.
Foreign currency products were popular in Poland in general until the Swiss franc suddenly changed its rate to over two times higher. The simultaneous financial crisis caused to introduce restrictions related to granting payday loans and credits in foreign currencies.
Indexed payday loans – indexed in foreign currencies
At present, instead of foreign currency payday loans, payday loans are indexed in foreign currencies, ie indexed in relation to a foreign currency. They are not offered in a given currency, but they refer to a foreign currency and the exchange rate of a given currency then affects the amount of the installment. It is therefore a risky offer, but it can be profitable due to low interest rates.
Such payday loans and loans get them at selected banks, but only if certain requirements are met. A fairly high own contribution of usually between 20% and 30% is required, as well as high creditworthiness.
For holders of payday loans and credits in foreign currency
In Poland, however, there are a lot of people who have payday loans and credits in foreign currencies drawn years ago. These are mainly mortgages in the Swiss franc for the construction of a house or the purchase of an apartment.
Such people often have to deal with the problem of a much higher installment than at the time of borrowing. They have the option of converting the payday loan into zloty, but it may not be profitable – the installment may become even higher. An alternative choice is to pay installments in the original currency, in this case the Swiss franc. Now it is much easier thanks to online exchange offices – with them we can save up to several dozen zlotys on one installment.