If you take out a loan, you should be familiar with your rights. Otherwise, you risk falling prey to dubious credit intermediaries.
What is the maximum loan amount I can borrow?
As a consumer, I may apply for a loan of any amount. The lender, however, may only grant that loan if the debtor is capable of paying back the sum within 36 months without neglecting his/her basic needs. This rule also holds true if the credit contract stipulates a longer duration than 36 months.
How high should the instalments be?
We recommend not setting the amount per instalment too high. The reason for this is that you would have to pay a default interest if you fail to keep up with your instalments and – what is even worse – you would risk an entry in the ZEK registry (Central Office for Credit Information). This would mean that you would be banned from taking out any loans for several years. It is therefore much more sensible to settle for small instalments and avoid this risk altogether. In fact, you have the right to pay off more than the agreed instalment at any time. Borrowers should exercise this right.
Is a credit intermediary allowed to charge a fee for arranging a loan for me?
No. For consumer protection reasons, no separate fees may be charged for advisory and intermediation services. The total interest charges already cover all costs – including the cost of credit intermediation.
Can I pull out of an open credit?
Yes. Unlike with a mortgage or a car lease, it is possible to pull out of a loan at any time and without having to pay a prepayment penalty. The lender must provide the borrower with a final account. The borrower does not have to pay any interest on the sum that is repaid early. In case of early repayment, he or she therefore only pays interest for the time the loan was actually used.
How do I recognise reliable credit intermediaries?
Credit intermediaries must have a permit from the canton in order to be allowed to do business. You can enquire with the administration of your canton to obtain the names of all licensed intermediaries. You can recognise dubious intermediaries mainly by the fact that they charge a fee for their services. In this case: hands off – no matter what the intermediary promises you.
What if a bank grants me a loan that is too large?
If a lender fails to verify the customer's credit capacity in an adequate manner and seriously neglects its duties, this may have dire consequences: The credit contract becomes null and void and the customer is entitled to the total amount of the loan including interest and charges. What is more: he or she may even call in interest and other payments already made to the lender.
But note: When making the affordability calculation, the bank will calculate the attachable part on the basis of your income. This means that the bank subtracts the expenses required for maintaining a minimum subsistence level from your net income. So, if you fail to repay your loan because you have expenses exceeding your subsistence minimum or because you earn less, there is no way you can proceed against the bank. The debt advisory centre offers help in case of over-indebtedness.
What is the maximum interest rate?
The Federal Council is responsible for defining the maximum admissible interest rate. At the moment this is 10 percent.
I am interested in taking out a loan, but then decide against signing the contract. Can I do that?
Yes. As a consumer, I am not bound in any way and may pull out of a loan application at any time. If I have already signed the contract and returned it to the bank, I can withdraw from the contract before disbursement of the loan. There is a withdrawal period of 7 days from the time I have knowledge of the content of the contract. It is also possible to cancel the loan after the sum has been disbursed. In that case, you can transfer the total amount back immediately.
What do I do in case of formal errors?
The law stipulates precisely which points need to be included in a consumer credit contract, e.g. the annual interest rate owed or the right of cancellation. If these points are not listed, the customer is entitled to the loan over the originally specified duration, but does not have to pay any interest.