Personal Loans in Switzerland, All You Need To Know:

FUNDGECKO is here to help you make a hassle-free and fast financial decision by walking with you to the best consumer credit that’s consistent with your needs and peculiarities. It’s our job to present to you everything you need to know before contracting consumer credits.

 

The current market for personal loans

FUNDGECKO gives you a monthly update of the most relevant news regarding consumer credits. Take a quick read of what affects credits this month.

• After a meeting featuring interest rates on March 24 2022, the Swiss National Bank agreed to maintain its long-standing interest rate policy of -0.75% on sight deposits making it the lowest interest rate in the world. 
• Switzerland is among the many countries feeling the adversities of the Russian-Ukraine war. One of the major effects being inflation, the country saw a 0.2% inflation rate increase in March 2022. The inflation rate can only increase with the continuance of the war. Consequently, the Swiss financial systems will be affected, and will in turn increase the cost of lending in the country. 

While Switzerland is a preferable place to get personal loans from for its stable financial and banking systems, as well as its low lending rates, the situation might change with the ongoing Russia-Ukraine invasion. Nonetheless, the government is making efforts to cushion lenders from the harsh effects of the war.

How to compare online loan offers?

A loan is affected by many factors each of which you should consider before settling for an option. Meaning, you’ll need to work with more than two offers as you sort them out using the relevant parameters such as interest rates, cost of the links, commissions, and repayment term, among others.

For example to buy credit offers and save 600 francs

In the following table, we can see how to compare between online personal loan offers taking into account all factors.

Insert Table

By copying this table and performing different simulations according to the project we want to finance and the offer made by each entity, we will be able to know which one will be the best simply by comparing the total cost.

How to use FUNDGECKO to get personal loans

 

FUNDGECKO seeks to make the work easier for the user by outsourcing the most relevant information regarding loans including their characteristics, terms of operation, and conditions. At the end of the day, the user will be equipped with the best needed information and how to get the best loan whenever they need it. 

Our site requires the user to follow the following steps:

• Compare between the different loan offers you’re interested in for free.
• Go through the small print of the contractual terms to learn about its conditions and terms of operation.
• In case you develop any questions or doubts along the way, FUNDGECKO will step in as soon as you reach out so that you may have confidence in choosing a consumer credit of your preference. Click on “Contract” to get to the entity’s website and our experts will walk you through the whole application process.
• Our clients always want to come back and share their experience with us. Hence, we’ve provided a comment section where the user is free to share with newbie users about our services. 

Why do you look for personal loans?

 

There are many reasons why you may want to take out a personal loan. If you want to make a big purchase, buy a smartphone, buy a car, change your kitchenery, go for a vacation, and complete a project, among others a personal loan is the best option for you. 

Below are some of other purposes covered by a personal loans:

 

• Finance your wedding
• Finance your studies
• Finance vacation or trip
• Furnish or renovate your home
• Finance your projects
• Debt coverage
• Purchase home appliances and electronics
• Finance your health and beauty

Note: personal loans are generic and depending on the purpose, you may want a loan that’s specifically designed to suit that. For example, a student loan is better than a personal loan taken out to cover your fees because personal loans have high interest rates. Hence, consult with your lender to know whether there are better loan types. 

 

How to apply for a personal loan?

 

Personal loans are so beloved because of their short, hassle-free process of application. While you may have an option to make an online application, some entities will require the borrower to apply physically in their offices. Below are some of the most common steps to follow with personal loans:

 

1. Think out of the box. Switzerland has many personal loan lenders, hence, working with only one entity will not be an option. Inquire from at least three personal loan entities about the loan conditions and terms of operations before settling for an option.
2. Fill out the application form with the most accurate and genuine information about yourself as well as the conditions of the personal loan (purpose, amount and term) before submitting it to the lender either online or in person.
3. Receive the pre-approval notification instantly in the online application and after 2 days for the physical application
4. Send the required documentation either in person or by uploading it online through the various options that the entity provides.
5. If the entity approves your application, you’ll receive pre-contractual information, which you’re expected to read through to get a hang of the contract’s terms and conditions including the amount, term, interest, commissions, etc.
6. Sign the contract if we like the offer (in the office or by digital signature).
7. Receive the money. Depending on the lender, it will be paid to us immediately or for a maximum of 48 hours

Requirements for personal loans in Switzerland

There are several requirements you’re supposed to meet before your loan application is approved, according to Swiss Law. Below are some of the most common requirements:

1. Be of legal age – 18 years and above. However, some lenders also have a maximum age cap beyond which they’ll not grant loans.
2. Switzerland is your country of residence. Some lenders extend this requirement to Liechtenstein residents. Some lenders will also grant you funds if your residence is within the canton in which the entity serves.
3. You have stable employment. According to Swiss Law, borrowers are not eligible for loans during their probation. 
4. Have a healthy level of debt. Owing a lot of money for other credits will reduce our chances of getting financing again. Our level of debt should be in line with our income (devoting 35% or less of our salary to the payment of all loans)
5. Do not register poor credit with any credit bureaus in Switzerland (ZEK, CRIF, Intrum Justitia). 

 

It is essential that we are responsible and that we do not take out personal loans if we are not able to assume their repayment. In that sense, it is advisable to dedicate a maximum of 35-40% of the income to the payment of our loan installments. We can use a personal loan simulator to find out the total cost of the credit and assess whether we could repay it or not.

Documentation for applying for a personal loan

 

• Copy of your identity card or any other valid proof of identity
• A bank statement that includes your income and expenses for the past few months
• Proof of income. Depending on the entity, you might need the last three payslips
• The last income tax return (especially if we ask for large amounts)
• Have a proposal form wherein you’ve detailed the purpose of the loan. This doesn’t apply to small loans.

Asking for a personal loan from a bank with which we have an active account and your receipts and income are domiciled will save you the hassle of much paperwork.

 

Who grants personal loans in Switzerland?

With the breakthrough of other financial entities in the modern Swiss financial market, banks no longer monopolize lending as was the case in the past two decades. 

In this section we will see which are all the lenders we can find and how are their personal loans:

Entities that grant personal loans:

• Bank entities
• Credit Financial Institutions (CFE)
• Private Lenders
• P2P Lending Platforms

Obtain financing through banks

• Long repayment periods
• Huge loan amounts
• Friendly interest rates
• Fewer eligibility criteria than other loan providers

• Slow application processSlow hiring at times
• More expensive than other providers due to commissions
• Seniority is greatly considered
• More related products

Credit Financial Institutions (CFE)

• Flexibility in terms of purpose
• Low interest rates
• Cheap because less commissions are involved
• Fast application process

• Stringent eligibility criteria
• May greatly affect applicant’s credit history

Getting loans online with private companies

• Fast application process
• Few eligibility criteria
• Loans accessible to new applicants

• Costly due to high interest rates
• May greatly affect your credit history

Financing through P2P platforms

• Fast application process
• Top loan conditions

• Expensive due to unfavorable rates
• Long hiring time
• Not available to applicants with a negative credit score on ZEK, Intrum Justitia or CRIF

FAQ: Frequently Asked Questions

What is a personal loan?

A personal loan is a consumer credit that borrowers get when in an economic emergency. The lender grants the borrower a particular amount of money which they will require back after the agreed time. The amount to refund is always more than the principal amount we get because of interests, commissions, and other fees. Depending on the agreement, the lender will have us pay the whole amount as a batch or in installments. 

Personal loans are naturally small and have high interest rates. They also have short repayment periods. Hence, they’re mostly used during minor economic contingencies such as debt coverage, clearing medical bills, completing a project, etc. 

Why don’t you give me personal loans?

There are a couple of reasons why your personal loan application is rejected. It’s not the lender’s obligation to grant you the funds. Hence, a single mistake will automatically disqualify you for the loan. Having a negative credit history on any Swiss credit bureaus will have your application rejected. Moreover, you might not be meeting the eligibility criteria we listed above, including your residence, purpose, employment status, and age. 

What is the binding offer of a personal credit?

Before you get to the point of signing up for a credit, the lender will always give you a binding offer, which indicates the conditions and clauses of the loan contract. You’ll have 14 calendar days to go through it while comparing options.  

Can personal loans be paid in advance?

You may want to repay a credit before the agreed time and Swiss law has allowance for that. Applicants will be required to cover for the whole amount which is the principal amount, the interest, fees, commissions, and any other costs. However, before making the repayment, you’ll need to notify the lender in good time. Some entities will charge the early repayment fee. 

What if I take out a loan online and then regret it?

Swiss Law allows consumers to withdraw their loan application within the safe 14 days after receiving the funds. Anything beyond the 14 days will attract penalties. 

What happens if I don’t pay back a personal loan?

Since taking out a loan is a commitment, failure to repay the funds is illegal. This will hurt your credit history besides landing your name in Swiss credit bureaus. This will also mean that you’ll not be able to access loans in the future. 

When to Apply for a Fast Loan

You need a quick financial injection, probably due to an emergency. Fast loans are small in size, high in interest, and have a short repayment term. The loan is only applied when the purpose is urgent and cannot wait for your next income. It’s therefore advisable to borrow responsibly and repay a loan before taking out another one.

 

Wrapping Up

 

A loan is helpful if only you’re able to assume repayments comfortably and within the required time. To avoid surprise payments in the future, be sure to read through the contractual terms that the entity sends you.

Be safe and borrow responsibly.

About this page and our methodology

About this page: we are passionate about helping you to get the best financial product that’s consistent with your financial situation. We, therefore, marshal the best available information about consumer credits and how to compare the options so you may end up with the most attractive offer at the moment.

Source: the information regarding the main characteristics of loans in Switzerland and their current regulation comes from the World Bank statistics and the Swiss Consumer Credit Act, among other reference portals.

Methodology: The data relating to the conditions of these products (amount, term, interest, etc.) have been obtained through online research and consultation of the official statistics of the aforementioned reference sources.

About Us: FUNDGECKO is an online comparator website specializing in personal finance and home economics products. We help our users not only compare the available financial products in the market but also provide rich information that will shorten the decision-making process and help them end up with the best offer.

Note: the services we offer are totally free for the user, as FUNDGECKO obtains its income from advertising and its featured products.