Personal loans: 5 important tips on how to debunk frauds

You should take a close look at every provider to avoid getting caught in a predatory lender's trap. Source: Thinkstock

Dangerously tempting: loans despite debt collection, without credit check or ZEK disclosure. See through the 5 most frequent tricks used by predatory lenders – with the help of 

Some slogans used on the Internet or in newspaper ads sound very tempting. And the numerous search requests on Google prove that they succeed in generating interest in Switzerland. In fact, many in Switzerland appear to be looking for loans without ZEK (Swiss credit reference agency) disclosure, loans despite debt collection or loans without credit check.

However, these offers are just as dubious as they sound promising since some of the people behind them are no trustworthy lenders but swindlers from abroad.

Read how to effectively protect yourself against illegal tricks.


Trap #1: Loan without credit check

In Switzerland, it is generally impossible to obtain loans without credit check or without ZEK disclosure. All credit banks are obliged to report all loans to the Central Office for Credit Information (ZEK) as well as the Association for the Maintenance of an Information Centre for Consumer Credits (IKO).

If a bank violates this rule, it may face legal action. So be careful if someone tries to lure you with a loan without credit check or ZEK disclosure because it is very likely a fraud attempt.

Trap #2:  Loan despite debt collection

Loans despite debt collection are just as impossible since every bank is required to check a client's creditworthiness and debt collections usually have a negative effect on people's credit standing, which means that one cannot obtain a personal loan.

Trap #3: Administrative fees

In Switzerland, administrative fees may not be charged separately. It is prohibited by law. For the protection of consumers, the Consumer Credit Act (text not available in English) stipulates that all fees must be included in the base rate of the loan. So if a lender asks for money before accepting your application for a personal loan, for instance, this should set all your alarm bells ringing.

The fraudsters send their victims a "binding contract confirmation" that may seem trustworthy at first glance. However, the last few paragraphs then suddenly mention a broker's commission. It is pointed out that the contract documents will only be forwarded once the payment has been made.

Trap #4: Instant loans

Fast cash advances and instant loans promise to provide immediate help. According to the law, customers have to wait for fourteen days before their personal loan is disbursed. Lawmakers thus want to make sure customers think things through once again before carelessly running into debt. Instant loans are therefore an empty promise made by untrustworthy brokers to lure customers into their trap.

Trap #5: Foreign banks

You should immediately grow suspicious if the company has a foreign address. Predatory lenders usually work with companies from Germany or Austria.

Foreign banks are not allowed to issue personal loans in Switzerland, though. The extension of a loan requires official approval or a banking licence, and for this, a company must have a registered office with an entry in the commercial register.

You can check online in the Commercial Registry (ZEFIX) whether a company is listed in the commercial register.


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