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What are the rules for personal loans in Switzerland? Who can issue loans? What organizations are involved? Comparis sheds light on the matter.
Loans – a brief description
Loans refer to a payment made by a creditor to a borrower: for personal loans, this involves lending out money. Loans are awarded based on predefined conditions (e.g. costs, repayment terms) and have to be paid back within a certain period of time. Loans can be either secured or unsecured.
Normally there are two parties involved in issuing a loan: the borrower who receives the money and therefore becomes the debtor, and the creditor who lends out the money. There are various types of creditors, usually banks or bank-like institutions.
What are the different types of loans?
The two most relevant factors for categorizing loans are:
Business loans can be broken down into short-term operating loans and long-term investment loans.
The following are examples of loans for private individuals:
Personal loans can be distinguished as follows:
You may encounter the following marketing terms in the context of loans:
Personal loans: definition and basics
There will be different legal and formal requirements depending on the type of loan in question. Loan agreements between private individuals are valid even without a contract and are regulated by the Swiss Debt Collection and Bankruptcy Act (SchKG).
Consumer loans on the other hand, are subject to extensive legal and organizational requirements defined by various agencies:
Main components of a personal loan
When does it make sense to take out a loan?
People often take out loans due to changes in their life circumstances. What does this mean? It could mean making a necessary purchase like a car or fulfilling a long-held dream without clearing out your savings account.
Loans are basically appropriate for situations such as the following:
Loans should be avoided in these cases:
Who can issue loans in Switzerland?
Swiss law distinguishes between commercial lending and non-commercial lending.
Financial institutions, credit institutions, banks: in Switzerland, banks are the most common commercial lenders issuing loans to private individuals, whether it's a full service bank, a separate business unit of a bank, a specialized lending bank or a dedicated credit institution.
Crowdlending institutions: with respect to personal, business and real estate loans, the total loan volume issued by crowdlenders has been growing sharply year by year. Crowdlending platforms act as brokers between lenders and borrowers. In this case, lenders are either private individuals or institutional investors (companies). Although crowdlending platforms do not issue loans themselves, they are still subject to the provisions of the Consumer Credit Act when handling personal loans.
Credit brokers: credit brokers are private individuals or legal entities that provide commercial brokerage services for personal loans. This means that they do not award loans themselves, but rather advise clients on their options and manage the lending process between the bank and the borrower. Credaris, a partner service of Comparis, is one example of a credit broker. Here you can find out more about the process and the benefits of using such a service.
Your next steps:
Calculate maximum loan amount
Find out how much you could borrow according to the Consumer Credit Act.
Get an overview of the lending market
Compare possible interest rates and lenders in Switzerland.
Apply for your loan
Once you've decided to take out a loan, click here to start your application.
Important criteria for consumer loans
How interest rates and loan costs are determined
Lenders carry out thorough credit checks to determine whether to extend credit and at what interest rate.
All the costs directly associated with the loan must be included in the effective annual interest rate. This means that there can be no additional costs beyond the monthly instalment agreed in the contract. This excludes extra, purely administrative expenses such as payment reminders and additional account statements. Costs associated with optional loan insurance are also usually listed separately.
Minimum and maximum loan amounts in Switzerland
In Switzerland, loans range from 1,000 to 250,000 francs – very occasionally more. Possible loan amounts vary from one lender to another. Loan amounts between 500 and 80,000 francs are considered to be consumer loans and are subject to the relevant provisions of the Consumer Credit Act.
In Switzerland, repayment terms range from 6 to 120 months, with the maximum periods varying according to the lender. Loans with repayment terms of less than three months are not regulated by the Consumer Credit Act.
Right of withdrawal for consumer loans
The Consumer Credit Act aims to protect borrowers. Part of this protection is the 14-day cooling-off period in which they may withdraw from their personal loan agreement. This is why consumer loans are only paid out two weeks after the contract is signed, once the cooling-off period is over. Non-consumer loans can be paid out without this waiting period.
Considering taking out a loan?
Lending in Switzerland is governed by strict consumer protection regulations. Lenders have to adhere to strict guidelines when extending credit, and apply extensive eligibility and risk criteria of their own when evaluating loan applications. To guard against fraud, these criteria are not made known to the public. This means that it is not always possible to gauge your chances of being approved for a loan by a specific lender. Approximately 50% of all loan applications are rejected.
Credaris, a partner service of Comparis, will help you compare loan options and show you which lender is most likely to grant you a loan and at what conditions. By submitting a free, non-binding loan enquiry to Credaris, you can boost your chances of being approved for a loan by over 50% compared to applying directly to a lender.
Approval of a loan is forbidden by law if it would lead to over-indebtedness (Art. 3 UWG).
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