Glossary of terms

Term	Definition
Down payment	Advance payment, partial payment in advance. This term is most commonly used in leasing or installment sales, where the client does not have sufficient funds for the purchase.
Annuity	A regular payment to repay a long-term debt consisting of a fixed principal and interest payment. During the repayment period, the amount of the annuity payment remains the same, but the ratio of principal to interest changes. At the beginning of the repayment period, interest accounts for a significant portion of the payment, but gradually decreases over time.
Bank loan	A loan from a bank that you receive on the basis of a contract. It is usually more advantageous than non-bank loans – it has a lower interest rate, a longer repayment period, and is better regulated by law. It can be for a specific purpose (e.g., a mortgage for housing) or freely usable (e.g., consumer credit).
Creditworthiness	The client's ability to repay the requested loan, i.e., their ability to repay their obligations properly and on time.
Czech Trade Inspection Authority (ČOI)	The authority that monitors whether companies comply with consumer rights – you can file a complaint with them.
Debit card	A card that you pay for directly from your account – you can only spend as much as you have in your account. Unlike a credit card, you are not borrowing money, but paying with your own funds.
Debt	Money that you have borrowed and must repay. Debt also arises when you fail to pay a bill, rent, or invoice on time.
Debtor	A person who owes money to someone else – whether a bank, a company, or another individual. They have an obligation to repay the debt.
Debt enforcement	Enforcement of an obligation that the obligor (debtor) has failed to fulfill voluntarily. This is a last resort for dealing with an unpaid loan if the client refuses to repay their contractual obligations and is unwilling to seek a solution with the bank. Enforcement can only be initiated on the basis of an enforceable decision by a court or state administration body, an arbitration award, or a notarial deed with consent to direct enforceability. It is most often carried out by selling the mortgaged property, deducting wages, or ordering the payment of the debt from the debtor's account.
Judicial enforcer	An official who collects debts based on a court decision. For example, they may come to your home and make an inventory of your property.
Financial arbitrator	An independent expert who helps people resolve disputes with banks, insurance companies, savings banks, or credit companies. Their services are free of charge, and they can decide who is right—without the need to go to court.
Financial leasing	A financial product that can be used to finance the purchase of movable property. The financed item remains the property of the leasing company throughout the repayment period and only at the end of the lease does ownership transfer to the customer, which significantly reduces the risk for the leasing company.
Mortgage loan	A loan secured by real estate collateral. It is most often used to purchase real estate for residential or rental purposes (purpose-specific mortgage). Less common is the provision of real estate as collateral for a non-purpose loan, often referred to as an American mortgage. The loan is repaid in regular monthly installments.
Insolvency	Form of bankruptcy – insolvency is the inability of a debtor to repay their debts. The debtor may be a private individual, an entrepreneur, or a company. The difference between debt enforcement and insolvency is that debt enforcement covers the claims of only one creditor, while insolvency covers the claims of all creditors.
Insolvency petition	An application filed with the court in which a person declares that they are insolvent and requests a solution (e.g., debt relief).
Insolvency administrator	A person who checks whether the debtor is complying with the repayment plan and redistributes money to creditors.
Bankruptcy	A method of resolving bankruptcy, over-indebtedness of a natural or legal person, whether engaged in business or not. It is a special type of court proceeding in which the debtor's assets are liquidated and the proceeds are distributed proportionally to satisfy the established claims of creditors.
Consolidation	Consolidating multiple debts into one – usually to simplify repayment and reduce monthly payments. The advantages of consolidation are: Lower monthly payments – thanks to extended repayment terms, better overview – only one payment and one contract, possibly lower interest rates if you have good terms.
Overdraft	The option to go "into the red" on your checking account – the bank will allow you to spend more money than you actually have. This service is subject to a fee and the interest rates are often high. It is more suitable for short-term income shortfalls.
Credit card	A payment card that works on the principle of a loan. You make purchases using the bank's money and can repay the amount without interest by a certain date. If you don't, high interest begins to accrue. It is necessary to use it wisely.
Usury	Usury is the unfair lending of money at unreasonably high interest rates or other unfavorable terms, often taking advantage of the borrower's distress or ignorance. It is a criminal offense under the law.
Out-of-court dispute resolution	When a dispute is resolved without going to court, for example with the help of a mediator or financial arbitrator.
Moratorium	It provides entrepreneurs who are debtors with the opportunity to reorganize their financial affairs before the insolvency court decides on their bankruptcy. During the moratorium, the court cannot issue a bankruptcy ruling, or before insolvency proceedings are initiated. Only the debtor can file a motion for a moratorium.
Non-bank loan	A loan from a company that is not a bank. It is often more accessible because it does not require as much verification, but it usually has higher interest rates or fees. It is necessary to be very careful, read the contract, and verify that the company is licensed by the Czech National Bank.
Unreasonable conditions	When the contract contains unilaterally disadvantageous terms – e.g., high penalties or no possibility of withdrawal.
Unsecured creditor	A creditor who has no collateral. E.g., a loan without a guarantor or collateral.
Debt relief (personal bankruptcy)	Debt relief, also known as personal bankruptcy, means that a debtor is released from paying part of their debts under the supervision of a court. Debt relief is a legal process within the framework of insolvency proceedings. It is based on the principle of consolidating all of the debtor's liabilities into a single liability, which is repaid in a single specified installment. Debt relief is primarily intended for natural persons who are not entrepreneurs. It is also possible to discharge the debts of natural persons who are entrepreneurs or legal entities not considered entrepreneurs, provided they do not have debts arising from business activities.
Withdrawal from the contract	Option to cancel the contract without giving a reason – e.g., within 14 days for online purchases.
Consumer protection	Citizens' rights when shopping or entering into contracts – laws protect them from unfair practices by companies.
Consumer traps	Tricks that companies use to lure people into unfavorable contracts – e.g., "advantageous" loans with high interest rates.
Payment order	Form of summary proceedings. The court may issue it even without an explicit request from the plaintiff and without hearing the defendant if the claim asserts a right to payment of a monetary amount and if the asserted right arises from the facts stated by the plaintiff. In the payment order, the court shall order the defendant to pay the claimed debt and the costs of the proceedings to the plaintiff within 15 days of delivery of the payment order, or to file an objection with the court that issued the payment order within the same period.
Fee	Additional payments on top of the loan – e.g., for account maintenance, loan processing, or late payments.
Over-indebtedness	A situation where a person has so much debt that they cannot even pay for basic necessities and obligations.
Pre-contractual information	Information that the company must provide you with before signing the contract – e.g., how much you will pay in total.
Bridge loan	A special type of loan that a building society provides to its members who need to obtain funds to finance their housing needs before they meet the conditions for the allocation of the target amount and obtaining a loan from the building society. The client repays interest on the bridging loan (but does not repay the principal) and also continues to save in order to meet the condition of saving a certain percentage of their own funds from the target amount and be allocated a building savings loan. When the bridging loan is terminated, it is repaid in a single payment using the savings accumulated in the building savings account, and only then does the client begin to repay the regular building savings loan.
Claim form	The creditor must "register" with the insolvency court, otherwise they are not entitled to payments from the debtor.
Loan	A general term for money that a person borrows. It can be from a bank, but also from a friend or another company.
Debtors register	A database containing information about loans and any repayment problems. If you have ever failed to make a payment on time, you may be listed in the register. The best known are BRKI, NRKI, and SOLUS. Banks and companies use these to check your credit history.
REPO rate	The base interest rate set by the Czech National Bank (ČNB). It has a fundamental impact on how much banks charge each other for borrowing money, and thus on how expensive loans and mortgages are for ordinary people.
Revolving loan	Short-term loan with the option of renewal. In terms of credit, it works similarly to an overdraft facility, but unlike an overdraft, it is purpose-specific and independent of a specific current account. If the customer repays part of the amount owed, they can borrow again up to the credit limit, provided that the terms of the loan agreement are met. Thanks to its specific purpose, the interest rate is significantly lower than for an overdraft loan.
RPSN - Annual Percentage Rate of Charge	Annual percentage rate. Tells you how much you will actually pay for the loan over the entire year – including fees and interest.
Guarantee	A guarantee from a third party (known as a guarantor) that if the debtor fails to pay, the guarantor will pay. This is a very serious commitment – the guarantor bears the same responsibility as the debtor and may lose their money.
Guarantor	A person who guarantees someone else's debt. If the debtor stops making payments, the creditor has the right to demand payment from the guarantor. Therefore, the guarantor should always be aware of the amount of the debt, the terms of the contract, and the risks involved.
Approved debt relief	The court will decide that the debtor can be discharged from debt – either through repayments or by selling assets.
Loan agreement	A written agreement stating how much money you are borrowing, what the interest rate is, how many payments you will make, and how long you will be making payments.
Contractual penalty	The penalty you agreed to in the contract – e.g., you will pay an additional amount if you do not meet the conditions.
Installment	The regular amount you pay back to the lender each month (or as otherwise agreed).
Consumer credit	Loans for ordinary people, e.g., for purchasing appliances, phones, or cars.
Payroll deductions	The portion of your salary that your employer sends directly to a debt collector or court to repay a debt.
Reminder	A reminder that you have not paid something. It can be sent by email, post, or text message. It is often the first step before debt collection.
Interest	The extra money you pay for borrowing. For example, you borrow 10000CZK and pay back 12000CZK – the 2000CZK is interest.
Loan	A loan usually provided by a bank or other financial institution, typically for a larger amount and a longer period, often with interest.
Creditor	The person you owe money to. It could be a bank, an authority, or even an individual. They expect you to pay them back.
Request for payment	A letter in which the creditor requests payment of the amount owed. It usually includes a deadline and possible penalties.
Seizure of property	If you do not pay your debt, the bailiff may seize your property (e.g., television, car) and sell it.
Secured creditor	A creditor who has property as collateral – e.g., a mortgage secured by a house.
Statutory interest on late payments	If you pay late, the creditor is entitled to interest by law – even if this is not specified in the contract.
Pledge	Property that you give as collateral for a loan – this could be a car, apartment, land, or valuables. If you don't pay, the lender can seize and sell the collateral to recoup their losses.
Pawnshop	A place where you can get money in exchange for valuable items, such as jewelry, electronics, or watches. If you don't repay the loan on time, the pawnshop can keep the item and sell it. This is often a short-term and very expensive form of loan.
Credit intermediary	A government agency that monitors companies to ensure they comply with consumer protection laws. You can file a complaint with them if someone cheats you, refuses your complaint, or violates your rights.