Consumer loans are granted by banks and non-bank financial companies to private individuals for non-business purposes. Consumer credit can be both non-purposeful, where the borrowed money can be used for anything, and purposeful. These loans are used to finance the purchase of various consumer goods and services. The conditions for granting consumer loans are regulated by Act No. 257/2016 Coll. on Consumer Credit.
Types of consumer loans
There are several types of consumer loans. For example, you can take out an overdraft with your current account, which is a short-term, non-purposeful and unsecured loan. If you do not have your own money in your current account, you can go into deficit up to a certain agreed amount.
Cash consumer loans are another type. You can get from a bank or non-banking company from a few tens to hundreds of thousands of crowns. After signing the contract, the bank will send you the necessary cash to your bank account.
Credit card loans are also very common in the Czech Republic. Most credit cards offer an interest-free period where you can make repeated payments over a period of time until the agreed credit limit is exhausted. If you repay the money by the end of the interest-free period, you pay no interest. However, be careful with cash withdrawals, as these are not covered by the interest-free period.
In brick-and-mortar stores and on the Internet, you can also buy goods on hire purchase. In this case, you simply choose a specific item (for example, a new sofa, TV, fridge) and pay for the purchase with the agreed consumer credit.

What should I look for when choosing a consumer loan?
When choosing a consumer loan, be particularly interested in the APR (annual percentage rate). This tells you the true cost of the loan and helps you evaluate the merits of different offers. The APR includes not only the interest rate, but also all the other fees associated with the loan (e.g. loan origination, administration and maintenance fees). If you are considering a consumer loan, choose from reputable providers. A list of consumer credit providers and intermediaries can be found on the Czech National Bank’s website.