Bypass Loans Without Registers Law?
What does a loan without registers mean?
First, it is necessary to outline what is a loan without registers. It can be two quite different types of loans, respectively loans with two different ways of approval and subsequent process of lending money.
The first is the method of approval, which follows from the title, ie total circumvention of debtors’ registers, where the lender does not cooperate with the registers at all (not a member), so they do not look at them when approving the loan application and new does not even write the debtor.
The second process of approving a loan without registers is one where the lender inspects the registers, but if the applicant has an active record of the loan, the provider does not place so much emphasis on it (especially if the previous loan is repaid properly).
Debtor registers are not just negative
As already indicated, the debtors’ registers also contain information that the borrower is repaying his loans properly and to the full amount of the planned installments. Indeed, the debtor registers function not only as a blacklist of debtors, but also as a record of the repayment history of each registered debtor.
Can lenders completely skip registers when approving loans?
Yes, they can. Consumer Credit Act No. 257/2016 Coll. it allows. As? By not obliging non-banking companies to become members of the register of debtors (membership fees are paid here and it is possible to access the database, enter information in it, but also delete data related to the loan from a specific loan provider – a member of the company operating the registry).
If a non-banking company is not a member of the registry and does not have the opportunity to consult or write into it, it simply does not do so. This, of course, deprives them of the opportunity to find out as much information as possible about the applicant, which leads to a higher degree of risk when approving the loan.
Well, these lenders compensate for the higher risk of the higher price of their loans. Therefore, it is always necessary to count on the fact that a loan without registers will be significantly more expensive than other types of non-bank loans. Sanctions and fees for possible postponement of installments will be higher.
Verification to an “appropriate and necessary” level
However, lenders without a register do not have a completely free hand. Article 84 of the Consumer Credit Act requires them to verify, to an “appropriate and necessary” extent, both the information provided by the borrower and information from other sources, where the register is not directly ordered here. Indeed, information from other sources is meant by the legislature as ‘independently verifiable data’.
It is therefore up to the lenders without registers to find a source for the legally required ‘independently verifiable data’ than the debtor registers. And, as you can see, they are successful in their search because they have been licensed Bank. Otherwise they would not be able to function in the lending market at all.