How High Can and Should My Loan Installment Be?

People who earn less than the national average monthly do not have a chance to get a loan if they are currently paying installments whose value exceeds half of their salary. These are the next recommendations of Recommendation T, which came to light through the Polish Financial Supervision Authority. Learn more at

According to the recommendations of the portal people with income less than the average level of salary, can not apply for a loan in a bank or other financial institution. We are talking about clients who have cash obligations, whose monthly installments exceed 50% of net earnings. These are recommendations aimed at preventing the debts of many reckless clients who would have tried without success for further loans falling into the spiral of endless commitments. These recommendations apply in particular to individuals who do not have high monthly earnings. The limit includes 50% of earnings, for people below the average salary of PLN 4 047 gross.

The indications contained in the recommendation T relating to over-indebtedness also include people who earn a monthly average above the national average. In addition, according to the recommendations of the Financial Supervision Authority, the loan will not be granted to persons who spend over 65% of monthly income on monthly installments.

These changes in Polish policy are aimed at reducing the level of irregularly paid loans. According to reports, loans repaid by households reach even PLN 411 billion. Over the years, the situation will deteriorate, as it is estimated that in a few years this amount will increase even twice. The value of non-performing loans will also rise upwards. These are very disturbing statistics that give a lot to think about. For this reason, the state is constantly introducing new procedures aimed at reducing these values.

Exceeding the limit by the borrower – reducing the value of the loan by the bank

Exceeding the limit by the borrower - reducing the value of the loan by the bank

In the case when the limit exceeded when making the creditworthiness assessment, the bank may reduce the amount of the loan or refuse to grant it. This is a kind of caution, and its task is to protect deposits, as well as customers who, through recklessly fall into the spiral of loans, which they are unable to meet. So far, banking institutions have used their own criteria that were varied and depended on the level of risk of each of them. Especially that banks very often pay attention to income that was not specified or whether they have financial resources in a given family. These factors translated into a kind of freedom to grant loans.

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