When does a loan make sense?
People often take out loans due to changes in their life circumstances. This could mean making a necessary purchase like a car, or fulfilling a long-held dream without emptying your savings account.
When a loan is suitable — and when not
In principle, loans can be suitable:
For getting through temporary financial difficulties.
When you need additional funds quickly and don’t have time to save.
For making long-term purchases such as furniture or a car.
For investing in your future, such as by taking a continuing education course.
If you have stable income but need to preserve your savings.
Loans should be avoided in these cases:
For ongoing financial difficulties that a loan would only postpone.
For non-durable goods or leisure activities and holidays.
For non-essential products that far exceed your means.
What do Swiss people most often take out a loan for?
Financing the purchase of a vehicle is the most common reason for taking out a loan
More than one-fifth of Swiss households have at least one loan for buying a car (source: Swiss Federal Statistical Office, published February 2020, not available in English).
Comparis
When does it make sense to take out a loan for buying a car?
When buying a car, you have the option of paying with your available means (e.g. in cash, via bank transfer, etc.), entering into a leasing agreement or taking out a car loan. Paying in cash is definitely the cheapest option, but the funds aren’t always available. If your budget is tight, it makes more sense to take out a loan to buy a used car instead of leasing a new car. This means that most cars bought on credit are vehicles for everyday use, not luxury purchases.
Reasons for taking out a car loan:
You can’t wait to make the purchase
Your family is about to grow
Your current car broke down
You don’t want to dip into your savings
