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Loans for consumers and entrepreneurs.

In this section you will find an overview of available bank loans. What it is about, who can get it and what money can be spent on. Individual offers can then be clicked to see a comparison of the offers of these loans.

Three basic rules for loan applicants

Three basic rules for loan applicants

  1. Know your loan.
  2. Know your limit.
  3. Allow for possible problems in the future.

It is worth knowing about your loan not only interest and APR, but also how high a person’s sanctions await in late repayment, whether it can be postponed, etc. It is necessary to have an overview of these details before signing the contract.

You must also be informed about your budget and not take out a loan whose monthly payment would be too high for the budget. Repayments should be paid from what remains extra in the budget each month, not from other sectors.

Possible problems include loss of work or health problems. In such cases, it is worth having a several-month reserve in your account and avoiding any further burden on the situation.

Bank loans

Bank loans

Bank loans are among the standard and most reliable loans. Banks offer relatively low interest rates. Unlike non-banking institutions, however, banks are much more selective. If a person does not have a sufficiently high income, or if he has an entry in the debtors register, he is likely to reject his application.

Bank loans offered include:

Consumer loan

Consumer credit is a classic loan. It can be purpose-built (money must be spent on a predetermined goal) or non-purpose (money can be used for anything). Consumer loans are characterized by relatively low interest rates and flexible repayment periods. Finance can be used to purchase consumer goods, holidays, cars. In August 2019, consumer credit became cheaper. The bank consumer credit interest rate index follows the broker consulting index.

Business loan

The business loan is provided to entrepreneurial entities for the development of the company or to cover operating costs. Often a certain annual turnover is required to provide a business loan or to increase the maximum loan amount.

Loan for starting entrepreneurs

Loan for start-up entrepreneurs is provided to entrepreneurs to start their own business. It offers much higher sums for lending but may also require property liability. Banks are even more cautious when negotiating business loans.

Car loan

A car loan is one of the ways to buy a vehicle in addition to a finance lease and an operating lease. Compared to leasing, however, one becomes the owner of the car immediately. It is usually a special-purpose consumer loan. The funds must go to purchase the car.

Mortgage loan

Mortgage loans, popularly mortgages, are the most commonly negotiated bank loans. The bank will stop the property for which the bank will provide finance. Currently it is necessary to pay about 20% of the price of the property in advance, the rest is paid from a mortgage loan. Thanks to the property, it is a relatively safe loan for banks and therefore offers a very low interest rate.

Mortgage loan also appears as a so-called American mortgage. Such a mortgage is negotiated if the candidate wants to use the money for other purposes than buying the property itself. For American mortgages it is necessary to pay 25 – 30% of the price of the property.

Home Loan

Unlike mortgage loans, there is no need for a consumer home loan to secure property. As a result, one becomes an immediate and full owner of the property he buys. The disadvantage compared to the mortgage is the higher interest rate.

Building savings loan

Building savings loan is provided to people with closed building savings. It is a special-purpose loan that can only be used for housing. Normally, the funds are used to pay the amount of the mortgage that the candidate has to pay from their own.

Bridging credit

The bridging loan, often also an intermediate loan, is concluded before the end of the building savings, ie. before getting a building savings loan. The building savings bridging loan thus “bridges” the time required to obtain a building savings loan. Money can be obtained in advance and before the building savings ends, only the interest is paid.

Loans for students

A student loan is a special-purpose loan designed to cover the costs of studying. It can be used for tuition, dormitory accommodation or educational courses. As a rule, it can be applied for by both college and high school students, and high school students can usually use it only to pay school fees.

The benefits of loans for students include lower interest rates, the possibility of postponing repayments or early repayment of the loan without penalty. Of course, there are certain conditions associated with a student loan, such as proof of study and the age of up to 26 years, often proof of regular income or a guarantor who will secure the loan.

Interest-free loan

An interest-free loan is a zero-interest loan. To obtain it, it is necessary to meet certain conditions, one of which is a permanent and sufficiently high income. Although the loan is not linked to any interest rate, the APR (annual percentage rate of charge) need not be zero. The APRC also takes into account the credit arrangement fee, which is usually calculated as a percentage of the amount borrowed.

Refinancing the loan

By refinancing the loan it is possible to release the family budget. What was previously a bargain loan may become an overburden due to changing interest rates. Refinancing is provided for a single loan and usually with a bank other than the one that originally granted the loan. The new bank will offer a more advantageous loan with a lower interest rate and will take over the debt. This way he gets a satisfied client and the client saves on installments.

Non-bank loans

Banking institutions are not the only providers of financial services on the Czech financial market. Loans and mortgages are also provided by non-banking companies, which are operated by hundreds in the Czech Republic.

Newly since mid-2018, non-banking companies are subject to much stricter rules. In addition to the registered capital of USD 20 million, they must also prove the origin of the money or, for example, prove their professional competence.

This has cleared the financial market, but it is still appropriate to be very careful when signing contracts with non-banking companies.

Individual types of non-bank loans and their offers can be found in the section non-bank loans.

Overdraft loans

Overdraft loans, normally overdrafts, are concluded with current bank accounts. They work on the same principle as credit cards and allow the client to overdraft their account. At this point, interest begins to be calculated, which is around 20%. There is no interest-free period like credit card, on the other hand, overdraft management is usually free.

Consolidation of loans

Loan consolidation is provided for two or more loans, where a new bank usually takes over these debts from another bank and consolidates them into one large loan. Thanks to loan consolidation, you can save money on interest, which would be paid for each loan separately. Overall, you pay less.

Overdraft loan offers can be viewed in the consolidation category.

Frequently Asked Questions

Frequently Asked Questions

Who can apply for consumer credit?

Consumer credit is intended for individuals (non-business) people over 18 years with Czech citizenship and permanent residence in the Czech Republic. Sometimes banks may require a current bank account with them.

Banks require stable, provable income and good repute. If the applicant has a low creditworthiness (ability to repay the loan) due to low income or existing debts or an entry in the debtors register, the credit will probably not be granted.

What is the APR?

The APRC, or the annual percentage rate of charge, includes all credit charges. In addition to the interest rate itself, it also counts on fees, for example, for keeping a loan, and thus more accurately indicates the profitability of the loan than the interest itself. For easy calculation of APR it is possible to use one of the calculators on the Internet.

The APRC on classic loans from banks is in the order of higher units of percent. For non-bank loans it is in tens of percent. For quick loans or micro-loans it can climb to a staggering several hundred thousand percent a year – this is because these loans are only concluded for a few weeks or months.

What documents are needed when processing a loan in a bank?

In general, the following documents are needed:

  • a copy of a valid identity card, sometimes a copy of your second identity card (eg passport, driving license, birth certificate, etc.),
  • documents confirming the amount of income normally in the last three months – for example, employer’s pay slips, pension receipts, tax returns or bank statements, if the transaction can be read as a payout,
  • proof of bank account – eg current bank account statement

However, each bank may require additional documents or require fewer documents. Non-banking companies tend to be more relaxed in this.

What if I am unable to repay the loan?

Banks try to prevent this situation by a broad and strict control before the negotiation itself, but after negotiation an unpredictable situation may occur – loss of employment, injury and everything will change.

If such an event occurs, it should be addressed immediately with the bank concerned. In this way, the so-called repayment schedule can be drawn up and the repayments are either reduced or postponed until the debtor’s situation stabilizes again.

It is possible to arrange insurance for the ability to repay, but it costs several hundred crowns a month and so can be quite burdensome to the current loan. In the event of default, the insurance company would pay the installments.

Is it possible to get a loan without a register?

A loan with an entry in the register is basically impossible with conventional banks. However, this may not be a problem for non-banking organizations. Although newly non-banking companies are obliged to check the debtor register and make sure that the borrower can repay the loan, this is not necessarily the case in practice.

Is it possible to obtain a loan without proof of income?

Again, a situation similar to the register of debtors. The lasso banks do not allow it. Non-banking companies can offer loans without proof of income. Possible high fees and higher interest rates must be taken into account.

What is the difference between refinancing and consolidation?

Refinancing is provided for only one loan, which offers better interest and thus the borrower can save. The bank will in turn get a satisfied client.

Consolidation is provided for two or more loans, when these different loans are taken and combined into one more advantageous loan. Thus, the borrower does not have to repay the interest for each separately and saves on the administrative costs of keeping track of all loans.

When will the money come from the loan?

After processing the application money comes within an hour. However, it may take days or weeks to process your request.

Alternatively, non-bank loans (especially quick loans or SMS loans) can arrive within an hour of the request. At the same time, the application itself can also be processed from home online in most cases.

Is it possible to pay the whole property with a mortgage?

This is currently not possible. LTV (loan to value – how much of the price of the bank will pay the mortgage) is around 80% and the remaining fifth must pay the candidate of their own. It used to be only 10%, but it has risen in recent years. Normally, building savings or building savings loans are used to pay this amount.

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