How to get loan in Czech as foreginer?

How to get a loan as a foreigner working in Czech Republic?

Living abroad can bring new financial challenges. One of them might be the need for a loan. Obtaining a credit as an expatriate in another country where you work can be challenging, but with some planning and information, it can be achievable. Here are a few steps you can take:

Research Local Banks:
Every bank has its own rules and processes for granting loans to foreigners. Find out which banks or financial institutions are willing to provide loans to foreigners. Our role is to save your time as we regularly collect information about terms.

Employee – Job Contract: 
Banks require stability of client’s income and long-term job contracts. Ideal situation is an employment contract for an indefinite period running at leas one year. However for loan is possible to apply after 3 months.
Loan approval is also possible for a fixed-term employment contract, if is running min. 1 year and if it was min. once extended.  For a fixed-term employment contract, there must not be less than 3 months until the end of validity. Salary has to always be send to your bank account. Never accept salary in cash.

Business – Tax declaration:
Getting a loan as a foreign entrepreneur is very difficult, the criteria are much stricter and it depends mainly on the amount of net income after taxation and after deduction of social contributions and health insurance. Banks require at least 2 years of existing business.

Documents and Work Permit:
Most banks will require a valid identity document and proof that you are legally employed in the country where you are applying for a loan. Make sure you have all the necessary documents available. Banks prefer clients with permanent Czech residence, however exceptions are possible.

EU citizens:
Although citizens from EU countries can enter the Czech labor market without obtaining any residence permit, banks require min. temporary stay. Some banks accept temporary residence only in case you have bank account with salary domiciliation min. 6 months.

Non-EU citizens:
Temporary residence: a limited number of banks allows citizens from outside the EU to obtain a loan on the basis of temporary residence. Salary domiciliation min. 6 months is required. 
Working visa: there is currently only one banks supporting clients with working visa. The maximum maturity period is limited up to 3 years.

Personal ID number “rodné číslo”: absence of personal ID number reduce chance to get loan, therefore ask first the Ministry of the Interior to assign a ID number. Please be aware that social security number or number of health insurance is not the same.  

Improve Your Credit History:
To improve your credit history open first small credit, the best way to work on credit history is start by opening credit card or overdraft to bank account. Ideally with limit e.g. 10.000 CZK. Never apply for big loan with long-term first!
In case you are rejected by bank, never try immediately apply again in another loan for the loan with the same parameters. Rejected applications are recorded in the Czech Bank Credit Bueau. Three rejected applications mean stop for next 6 months!

Payment history:
Always pay your obligations on time, bank verify payment history also with non banking providers and Telephone operators (Vodafone, O2, T-Mobile) or Electricity distributors (E.ON Energie, ČEZ, Innogy). You can get a statement with your history from solus.cz 

Income – Expenses:
Your income must be sufficient for payment of the loan. After deducting regurlaly monthly expenses (e.g. for rent, energies, food, medicaments, phone, internet, kindergarten) there must be sufficient balance for repayment plus reserve. Bank will always deduct minimum amount for life cost. 

Compare Offers – APR:
Don’t accept the first offer you receive. Compare different options and terms from various banks and financial institutions to get the best deal for your needs. For comparison is the best way use Annual Percentage Rate (APR), in Czech called RPSN. The APR, or Annual Percentage Rate, represents the total cost of borrowing, incorporating interest and fees, presented as an annual percentage, aiding borrowers in comparing loan offers effectively.

Have Clear Financial Goals:
Before applying, clearly establish how much money you need and how long you will need to repay the loan. This will help you choose the right type of loan and optimize the terms.

Getting a loan in Czech Republic may require some patience and effort, but with good planning and our experience you can achieve your financial goals.