Can the loan money be used freely?

This is a common doubt – will I have to inform the bank about what I want to spend money on loans or credits? In this respect, financial products can be divided into two types.

No specific purpose


The first group is those where customers do not have any special restrictions on spending cash. These include:

In the case of products from the first group, even if a bank employee asks us what we want to spend the money on, it will be a polite question or an attempt to collect statistical data rather than a requirement. Neither the contract nor the design of these products has a provision that would impose any restrictions on the issue of cash.

In practice, after withdrawing cash or making funds available on the account, no one will check how and for what they were intended.

There is absolute freedom in this matter. It is worth remembering, however, that banks may impose indirect restrictions that are intended to prompt the customer to use the product correctly. These may be, for example, high commissions for cash withdrawals by credit card from an ATM or accruing interest for such a transaction immediately after it is completed.

For a specific purpose


The second group includes products for a specific purpose. These include:

In each of these cases, the bank will require us to confirm that we are spending money as declared. This requirement has its basis in the Banking Law, which says that “by the loan agreement, the bank undertakes to make available to the borrower for the period of time specified in the agreement the amount of cash for a specific purpose” .

Learn more about the difference between a loan and a loan here


And it’s not just about documents. In many cases, the customer will not even see the money – they will not be credited to his account or they will not be paid in cash. The very mechanism of transfer of funds will preclude spending them for purposes other than those declared in the application and entered into the loan agreement.

The funds obtained from the consolidation loan will be transferred directly to the accounts in the banks in which the customer has up to now been in debt.

In short – they will be used to repay previous loans. Similarly, with a car loan or installment loan – the bank will be present when making a purchase (e.g. in an electronics store or car showroom), which actually excludes the use of money from the loan for another purpose.

In the case of a mortgage, the situation is a little more complex. In some cases, the customer may also not see the money – they will go (once or in tranches) to the account of the developer or owner of the apartment being sold, but it is also possible that the bank gives the customer more freedom in disposing of funds, e.g. when he is building a house.

However, this does not mean complete freedom – it will be necessary to document the subsequent stages of construction and settle the cost estimate that was the basis for granting the loan.

The survey “Social Diagnosis 2015” shows that Poles most often borrow for the purchase of durable goods (e.g. household appliances and electronics) and to pay for current needs, i.e. for life.

These credit products can be obtained without having to inform the bank about their purpose. On the other hand, loans granted in larger amounts (e.g. for the purchase of a car, real estate or renovation of real estate) are, without exception, targeted products and the customer cannot use these funds freely.

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