1. Loans Mortgages Credits
VOŠ – 3. ročník – 1. semestr

2. Loans a loan is a type of debt
it is money lent to a borrower from a lender
the borrower must repay the loan: principal
and the interest on the debt
©Lenka Lexová

3. Types of loans Time loans – repayable on the maturity day
Term loans – repayable in a number of
instalments
Long-term loan
Short-term loan (e. g. a bridge loan)‏
Medium-term loan
Unsecured loans, Secured loans
Personal loans – used for purchasing
consumer goods
Commercial loans – granted to business
organizations
©Lenka Lexová

4. Unsecured loans provided without any security – very risky
for the bank
credit card debt
personal loans
bank overdrafts
their interest rates vary depending on the
lender or the borrower
the rates may or may not be regulated
by law
©Lenka Lexová

5. Secured loans the bank is given a security until the mortgage
is completely paid off
mortgage loan - used by many individuals to purchase
housing
if the borrower does not pay the loan, the
bank has the legal right to repossess the
security and sell it to get back its money
©Lenka Lexová

6. Interest rates on loans
the interest is a fee paid on borrowed money,
it is the bank‘s profit
the principal - the amount of lent money
the interest rate - the percentage of the principal
which is paid as fee
banks borrow money from the Central Bank at
a borrowing rate
banks lend money at a lending rate, which is different
for various customers
©Lenka Lexová

7. Types of interest rates
base rate – given to reliable customers
fixed interest rate – the interest rate does
not change
flexible rate – a rate that changes over
the life of the loan
capped rate – a flexible rate of the loan
which is limited by a ceiling
©Lenka Lexová

8. Mortgage it is a type of secured loan
it is always ensured by a security
if the borrower cannot pay, the security
becomes the property of the bank
it is usually a long-term debt
©Lenka Lexová

9. Types of mortgages Fixed Rate Mortgage
the interest rate stays the same through
the term of the loan
Floating Rate Mortgage
the interest rate is periodically adjusted
based on an index
Capped Rate Mortgage
the interest rate fluctuates up to an
agreed limit
©Lenka Lexová

10. Credits it is the granting of a loan and the creation of debt
credit can also refer to delayed payments
for purchased goods
the borrower pays in instalments or the
whole sum until a certain date
the borrower also has to pay an interest,
arrangement fees and other charges
©Lenka Lexová

11. Payment cards used for payment for goods and services
accepted by sellers to make a purchase
there are many types:
Credit card
Debit card or cash card
Fuel card
Gift card
Electronic purse
©Lenka Lexová

12. Debit cards allow to withdraw money directly from
the cardholder's bank account in their
own country or abroad at an ATM
also used for payments in shops
this transaction is authorized - the customer
verifies the transaction by entering a PIN
or by signing a sales receipt
the money is taken directly from
the account
©Lenka Lexová

13. Credit cards allow to make payments but money is not
taken from the user's account after every
transaction
the cardholder can purchase goods thanks
to his promise to pay for them later
the issuer lends money to the consumer
the issuer charges an interest on the created
debt
a credit card has a pre-established
credit limit
©Lenka Lexová

14. Example of a credit card
Front side Reverse side
Issuing bank logo
EMV chip
Hologram
Card number
Card brand logo
Expiry date
Cardholder's name
Magnetic Stripe
Signature Stripe
Card Security Code
©Lenka Lexová

15. Listening
Refinancing mortgage loans Student credit card What are the advantages and disadvantages of having a credit card? What other type of card is available besides a credit card that allows you to make purchases and how does it work?

16. Case study
Imagine that you need a loan to pay for a car/a house/equipment for your office/ new machinery. What type of loan would you choose? Find a Web site that offers the type of loan you need, and analyze the information. What does the actual cost of the loan include?

17. Quizzes
Loans related vocabulary 1 Loans related vocabulary 2 Loans related vocabulary 3

18. Resources
English in Economics, Miroslav Kaftan, Libuše Horáková:, Karolinum business-english-finance.html