The tightening of lending conditions has been in force for several years. Even so, the Czechs are cautious and do not negotiate loans indiscriminately. Most Czechs read loan agreements carefully and are interested in the terms and conditions. Almost half of the people would appreciate highlighting key passages to make contracts even easier to understand.

Several years have passed since the introduction of compulsory licensing in the provision of credit, so only companies licensed by the Czech National Bank (ČNB) can offer consumer credit. There are currently 85 such companies, up from 60 000 before the conditions were tightened. The ČNB’s action has thus significantly reduced the provision of predatory loans.

However, despite the more precise rules, people applying for loans remain cautious when reading loan contracts and studying them honestly. According to a Cofidis survey, seven of ten Czechs read the contract for at least an hour and almost a fifth for a day or more.

A cautious approach is in order

Although the market has cleared up considerably due to ČNB licensing, there are still huge differences between companies offering loans. This can be seen in the regular Responsible Lending Index of People in Need.

There are differences both in prices and in the approach to the client. The latest results, for example, show that the difference in loan prices is as much as tenfold. This year’s results also focused for the first time on “free first loan” promotions, which are usually recommended by companies whose annual interest rates exceed 300 percent.

Five minutes is enough

However, Czechs still have reserves, as about a third are done reading contracts within five minutes, almost a tenth even admit that they do not read the contract at all, and only less than a quarter say they always read the entire agreement.

Czechs understand the terms of contracts

The survey also showed that Czechs have no problems understanding the contract’s terms and conditions, with 85 percent of people saying they know the terms and conditions of the agreement and a third understanding them ultimately. Even so, people would appreciate some improvements to contracts that would help them to understand them better.

Almost one in two would appreciate highlighting critical passages in the contract’s text, more than a third would welcome fewer technical terms, and around one in four would be grateful for giant print. Less than a tenth would like to see pictures or infographics in the contract or an audio version of the agreement.

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