It is hardly surprising – up to PLN 500 more per month for the household budget is a lot, not to mention the amounts that families receive. Until now, money was only granted to families with many children or parents in financial difficulties.
Now carers can also get a benefit for one child, and no additional documents, such as an income certificate or maintenance order will be needed when submitting the application.
The impact of 500+ on loans taken by Poles
Part of the money is allocated to children, as planned, part, unfortunately, for other expenses. For banks and lending companies, this information is irrelevant, and it is not their responsibility to control what the allocated money is being spent on.
From the perspective of creditors, the most important is the fact that family benefits are a constant income affecting the creditworthiness of potential customers. Let’s check which institutions pay attention to it and how from a legal point of view it looks like repayment of a loan with funds from the 500+ program and whether Poles borrow less thanks to 500+.
The number of Polish families receiving money from the state under the 500+ program is counted in millions. The program provides co-financing of PLN 500 for the second and each subsequent child, or for the first if the parents (or parents) do not exceed the income limit. Such a monthly financial injection means that those who use it for its intended purpose began: invest in the future of their children, provide them with conditions and resources for learning, or take them on holidays that have been postponed for years. Do Poles borrow less thanks to 500+, or maybe they just changed the source of financing?
In this respect, the availability of many banking products, which previously were out of reach due to lack of creditworthiness, became a great facilitation in this respect. Many families used loans in parabanks, because it was not where their income was checked in such detail. With the start of the 500+ program, according to forecasts, the number of incurred payday loans has decreased by several percent. Banks benefited because interest in installment loans automatically increased – for larger amounts and with longer loan periods. This does not apply to all products – e.g. mortgage should be excluded from this group.
Do Poles borrow less thanks to 500+?
To answer the question of whether Poles borrow less thanks to 500+, we must remember that benefits from the 500+ program are paid to the child (children) of majority, which in the case of a home loan could occur faster than the repayment period would end.
For this reason, banks are much more willing to grant 500+ cash loans to beneficiaries than to mortgage loans. The important information for borrowers is that the 500+ program does not assume verification of the expenses of all families, which is why the money from it can be used to pay financial liabilities. For everything to happen in accordance with the letter of the law, it is best if the family is able to document that the commitment has been used in some way to their child.