You can borrow money from a financial institution or from any private person. It can be a family member, friend, but also a completely foreign private lender. If you decide on a private loan of up to $ 1,000, the contract that governs it may be oral.
In the case of higher amounts, for evidentiary purposes and to better protect the interests of both parties to the contract, it is already recommended to draw up an appropriate document. However, if you want to use a bank or loan institution loan, regardless of the amount of funding, you will sign a contract in writing or electronically.
Courtesy and payable loans
The loan agreement may be courtesy (free) or payable. The first one can be found mainly in transactions between friends or family members. The second, more common option provides for the remuneration of the lender in the form of, for example, interest or a one-time fee for making funds available.
Paid loans are granted without exception by all banks and loan companies, although it is worth noting that in the non-banking sector there are promotional offers of payday loans for new clients, free of any fees.
Importantly, neither banks nor loan companies have full freedom in determining the cost of using their products. They must comply with applicable regulations, i.e. restrictions related to the maximum amount of interest or penalty fees for late repayment.
Private loans and the tax on civil law transactions
A private loan agreement, even if it does not involve interest, is not always completely free. This is due to the fact that its conclusion is a civil law act. In turn, this, in principle, is subject to the payment of tax of 2% of the value of the borrowed amount. Such a tax liability may be a significant burden in the case of larger sums of financing. While at the amount of $ 2,000 it will be relatively small and will amount to only $ 40, while borrowing privately $ 20,000, you have to reckon with an additional cost of $ 400.
The exceptions are loans granted by related persons – spouses, siblings, descendants, ascendants, and even stepmother or stepfather. Such transactions are subject to tax exemption. It can be used provided that the PCC declaration is submitted to the office and the impact of the loan on the bank account is documented.