How to know “banking,” or a language guide to the world of loans

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Also, do you ever feel that once you enter the shiny banking area, everyone around you will start to speak in a hushed foreign language, which even the Elvish acts as a clear language? We will explain the meaning of banking terms.

Let’s face it, it is somewhat difficult to be knowledgeable when applying for a loan if you don’t understand every second word a bank employee says. In this case, even the most serious applicant is faced with the expression of a rural package that does not know which beats.

We decided to shed light on the most commonly used terms.

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This is the ability to repay the loan. If you apply for a loan, the banking institution will properly check your creditworthiness and will focus on how high your income is and, above all, whether you have regular or occasional earnings. Do not blame them, lending money to a totally unknown person is a huge risk and want to check whether you have financial difficulties.

Interest rate

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The chicken will not grumble for free and the bank will not lend you the money solely from a selfless friendship. The interest rate is the price it sets for providing the money. It is expressed as a percentage, so if you borrow USD 50,000 and the interest rate is 5%, you end up paying USD 52,500.


Although the interest rate reflects the cost of the loan, it does not show how much you actually pay. Are you getting a little lost? We’ll tell you about it right away. Imagine yourself in the shop where you buy the carpet. The price tag on the carpet is 2000 USD, but this is not the final amount. You still have to pay for cutting the required size, a fee for packaging and possibly for transport to your apartment.

So is the loan. Although the interest rate expresses the price for its provision, the APR takes into account various fees. It is presented in the form of a percentage of the amount you pay to the bank per year. Therefore, if you see an APR of 8%, this means that you pay the bank 8% of the amount borrowed per year.


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This term is usually found in loans for higher amounts of money, which you repay over a longer period. Imagine the situation where you borrow a large sum of money that you will repay for seven years. Fixation guarantees the number of years the interest rate will remain unchanged. For example, if you see a loan with an interest rate of 6% for 5 years, this means that the bank guarantees that the interest rate will not increase for at least five years.

Finská půjčka

money loan

It is not a loan of money to buy a Finnish sauna, reindeer sled, or other Nordic eccentricity. A Finnish loan is a quick provision of a small amount of money (usually up to USD 10,000) for a short period, usually within 1 month. Many clients use it as a pre-payout financing. Its advantage is quick provision (the client can have money within one hour), the disadvantage is usually higher fees.

Secured loan

money loan

In some cases, the bank may require property liability, most often real estate. It is her insurance policy in case you are not able to repay the loan. A secured loan poses a higher risk to the borrower – if you cannot repay the loan, you may lose your house, apartment or cottage. But do not worry that someone would want to guarantee you real estate when you borrow twenty thousand – lower amounts are mostly unsecured, the bank’s liability is required for amounts in the order of hundreds of thousands.

Overdraft account

Overdraft account

Did you know that there is also a “loan,” which means you don’t have to go to the bank to apply? If you get a bank account that allows overdraft, you can elegantly come to a loan that you automatically process without waiting for approval from the banking institute. Certain types of bank accounts allow you to pay even less and pay for the loan automatically without having to visit the bank.


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