A concerning trend has emerged in the Czech Republic’s financial landscape, where up to 12% of people seeking non-bank loans would consider borrowing from loan sharks in times of need. This number has nearly doubled over the past year, primarily driven by low-income households lacking sufficient savings for unexpected expenses.
According to a survey by the Association of Non-Bank Loan Providers, nearly 40% of respondents have encountered offers for consumer loans requiring property collateral, either directly or through acquaintances. The situation is particularly alarming as predatory lenders are expanding their reach beyond traditional methods, increasingly targeting vulnerable individuals through social media and online platforms.
The scale of financial vulnerability is significant, with over 244,000 low-income households unable to cover unexpected expenses of at least 15,600 Czech crowns (approximately for items like a new washing machine or refrigerator). This number could potentially affect more than 400,000 families across different income levels.
The legitimate non-bank lending sector is showing increased caution, with loan rejection rates rising to 50.4% in 2024, up from below 40% in previous years. Most borrowers seek loans for essential purposes such as household appliance repairs, car maintenance, or necessary home equipment, with only a tiny fraction borrowing for luxury items.