When does the loan expire?


When taking a loan or borrowing, the bank or loan company signs a contract with the client, which specifies, among others, the repayment schedule and the deadline for repayment. The borrower should be aware that the loan expires over time. What does it mean? When will this happen?


The loan or loan is time-barred after 3 years from when the entire loan or loan amount became due or the individual installments of the liability were due. 


Three years to the limitation from Article. 118 of the Civil Code, it follows that the statute of limitations for a loan and a loan granted by an entrepreneur, not a natural person, shall expire after 3 years. This is a claim related to running a business and it does not matter whether the borrower or borrower is a consumer or an entrepreneur.

The situation is slightly different in the case of loans granted outside of business operations. If the lender is a private person and not an entrepreneur, then there is a longer limitation period for the loan repayment claim, which is 6 years.


How to calculate the limitation period?

How to calculate the limitation period?

Credit and loan expire after 3 years, but borrowers should know how to calculate this date. From what moment: from the total repayment of the liability or from the date indicated in the contract as the final time for repayment? Neither of these methods is appropriate because the law stipulates that the limitation period must be calculated separately for each loan installment.


Expiration of loan with no installment repayment

Expiration of loan with no installment repayment

Financial obligation, loan or credit should be repaid in accordance with the repayment schedule. If this does not happen, the bank or lending company sends the client a request for payment and a warning about the need to terminate the contract if they do not bring specific effects.

When the debtor does not react, the loan or loan agreement may be terminated legally by the bank or loan company. In practice, this causes that the entire amount of the liability becomes due and from that time the previously agreed repayment schedule ceases to apply. The debtor should immediately pay back the entire amount borrowed and not yet paid.


This situation makes it difficult to determine the limitation period for the loan. In such cases, installments that were due before the contract was terminated will be barred each separately after 3 years from their due date. Other installments that would be due in the future, but as a result of the termination of the loan agreement, this will not be barred within one period of 3 years from the date on which the borrower must pay the entire debt after termination. The end of the limitation period, according to the regulations amended on July 9, 2018, always falls on the last day of a given calendar year.


Effects of expiration of credit

Effects of expiration of credit

As a rule, banks do not wait 3 years for their credit to expire, but they carry out effective enforcement and take the case to court. However, if the deadline has expired, the bank or loan company whose consumer owed the money will no longer be able to recover its past due debts. The consumer is automatically subject to credit expiration in court. In turn, when the whole situation concerns the entrepreneur, he must raise the statute of limitations in court for the court to take them into account.


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