One in three Czechs plans to take out a loan to cover their utility bills

The attitude of Czechs towards borrowing money has not changed over the years, with about a third of people currently considering it. One in four has been considering a loan for a long time, but almost three in ten are driven into debt by increased energy costs or more expensive food, which they will be forced to cover with a loan.

Roughly two-fifths of Czechs do not need a loan. Less than a third refuse to take on debt, and approximately a third plan to take on a loan, according to a recent survey conducted by Ipsos for mBank, in which a total of 1,500 people were surveyed.

About a quarter of people have a specific purpose for which they plan to take on debt in the long term, but a few percentage points higher number of respondents will take out a loan in the coming days or weeks without having originally planned to do so.

As the survey results showed, rising energy prices and other commodities, which significantly impact family budgets, are also changing the priorities of Czech households. Compared to previous years, the purpose of borrowing is changing significantly.

“The group of Czechs who will have to borrow money for something unplanned in the autumn or winter will most often use this money for fees and annual bills for electricity and gas (44 percent), for everyday needs (22 percent), and, more recently, to invest in changes in energy use, such as replacing a boiler, solar panels, or a pump (15 percent). Those who plan to take out a loan for the longer term most often invest in renovations (29 percent),” said Kateřina Veselá from mBank.

About 13 percent of those considering a loan plan to consolidate their loans and possibly increase them.

People compare bank offers

More than two-fifths of people compare loan offers from individual providers, less than a quarter rely on their central bank, and one in eight will also approach it, but to be on the safe side, they will also look at competitors’ loan products.

The survey also showed respondents are sensitive to price parameters in the following order: interest, APR charges, the total amount they will pay, and the repayment amount.

Around a third of people also have a positive perception of repayment capacity insurance, a fifth of people are not entirely confident about it, and the same number would never take it out.