In Switzerland, banks, credit institutions, and private individuals grant loans. Banks specialize in mortgage loans and business loans, while credit institutions and private individuals mainly offer consumer loans.

Consumer loans cover amounts from CHF 500 to CHF 80,000 and are regulated by the Federal Consumer Credit Act. With a few exceptions, small loans, car loans, and P2P loans are treated as normal consumer loans.

Borrowing money begins with an application form and a credit check. After a positive check and acceptance of the offer by the applicant, the loan is paid out. Corporate loans often require collateral and offer more flexible conditions than personal loans.

The risks of taking out a loan include high interest rates, inflexible terms, and over-indebtedness. Realistic budget planning, loan comparisons, and a good credit rating offer protection. Credit insurance is usually not worthwhile due to high costs and exclusion clauses.

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Who grants loans in Switzerland?

In Switzerland, banks, credit institutions, and private individuals grant loans. Banks specialize in mortgages and business loans, while credit institutions and private individuals mainly grant smaller consumer loans. You can find more details on the various providers in the article on the loan comparison article. Here is a rough overview of the different types of loan providers.

1. Banks

In Switzerland, banks are the primary providers of loans. These include banks such as the internationally active UBS as well as the regional cantonal banks, such as Zurich Cantonal Bank (ZKB) or Geneva Cantonal Bank (BCGE). Banks offer various types of loans, including mortgage loans, Lombard loans, and consumer loans. According to the Faculty of Business, Economics and Informatics at the University of Zurich, 86% of all loans issued in Switzerland are mortgages.

2. Credit institutions

In addition to traditional banks, there are specialized credit institutions that also offer consumer loans and other financial products. These institutions focus on specific customer segments and provide customized solutions. Credit institutions are characterized by flexible credit lines and long terms of up to 84 months (7 years). Credit institutions are almost always the best choice for consumer loans.

3. Private individuals

In Switzerland, you are also allowed to grant loans as a private individual as long as you meet the legal requirements. This includes both contractually regulated lending from individual to individual and lending via suitable internet platforms.

What types of consumer credit are there?

There are three terms for loans that are often used in connection with consumer credit. In addition to personal loans, which refer to classic consumer loans, you will also see offers for small loans, car loans, and P2P loans. You can find more detailed information on the different types of loans in the Kredite Schweiz article specifically on this topic.

1. Personal loan

Personal loans (consumer loans) cover amounts between CHF 500 and CHF 80,000 and have a minimum term of three months. They are used for personal expenses such as vacations or renovations. The maximum effective annual interest rate is currently 12 percent. The loans are regulated by the Federal Consumer Credit Act (FLCC).

2. Small loan

A small loan is a colloquial term for a personal loan of a smaller amount that is used, for example, for unexpected expenses such as dental bills or for short-term financing of new household appliances. Small loans offer fast disbursement and simple application procedures, especially with digital providers. Loans over CHF 500 are considered regular consumer loans. There is no official maximum limit for small loans. Whether an amount is considered large depends on individual income and budget.

3. Car loan

In Switzerland, car loans are normal consumer loans. It is irrelevant whether you apply for the loan under the name car loan or personal loan.

4. Peer-to-peer loans (P2P)

Peer-to-peer loans (P2P) allow private individuals to lend directly to other private individuals without the involvement of banks. Like other consumer loans, P2P loans are free to use. They often offer lower interest rates due to the platforms’ lower operating costs. However, borrowers and investors bear higher risks, as lending without banks involves greater uncertainties.

How does the borrowing process work?

To take out a loan, first, fill out the application form on our homepage and specify the desired amount. The Kredite Schweiz team will put you in touch with the right partner to get you the best interest rate. This service is free and non-binding.

In the next step, you fill out a formal application so that our partner companies can assess your financial situation. The lender then checks your application and your creditworthiness. You will receive an offer with the best possible interest rate based on your creditworthiness. The better your credit rating, the lower the interest rate offered.

After signing the contract, you must wait for the statutory waiting period of 14 days. Once the waiting period has expired, the loan amount is transferred directly to your account and the repayment period begins in accordance with the contractual conditions.

What is the difference between a corporate loan and a personal loan?

A corporate loan and a personal loan differ mainly in their purpose and target group. A personal loan is used for personal expenses such as buying a car or renovating a house and is aimed at individuals. A corporate loan, on the other hand, is used to finance business activities, such as investments in machinery or working capital, and is taken out by companies.

Personal loans are usually handed out without collateral, based on the borrower’s creditworthiness and income, and have standardized conditions. Corporate loans often require collateral such as real estate or machinery and offer more flexible, customized conditions. The credit check for personal loans focuses on the applicant’s personal financial situation, while corporate loans analyze the company’s business figures and economic situation.

What legal provisions do you need to know?

In regulatory terms, personal loans in Switzerland are subject to the Consumer Credit Act (FLCC). The consumer protection regulations in the Consumer Credit Act protect borrowers from over-indebtedness. Borrowers must meet certain requirements, and there is also a mandatory credit check.

What are the requirements?

To take out a loan, borrowers must be of legal age (18) and have a permanent residence in Switzerland. In addition, a regular income is required to ensure the ability to repay. The exact amount of the minimum income varies depending on the lender, but it is a key requirement to ensure that the borrower can service the monthly installments.

What is the credit check?

The credit check is a legally required process in which the lender assesses the applicant’s financial situation and creditworthiness. This credit check involves analyzing proof of income, existing financial obligations, and the applicant’s credit history. A positive result of the credit check is decisive for the approval of the loan and also determines the interest conditions.

How are loans treated for tax purposes?

In Switzerland, the interest paid on consumer loans is tax-deductible. The loan amount can be deducted from your assets. You should, therefore, always keep all relevant evidence to be able to declare the interest payments correctly in your tax return.

What risks are there with loans?

When taking out a loan in Switzerland, there are several risks that have potentially significant negative consequences. These risks include things like excessive interest rates and fees, inflexible loan terms, over-indebtedness, damage to your credit score, and fraudulent offers. However, with caution and the right lending partner, such risks can be easily avoided.

How can you protect yourself from uncontrolled debt through loans?

You need to take a preventative approach to protect yourself from uncontrolled credit-related debt. Effective prevention includes a precise budget plan, a good credit rating, and choosing the right loan provider. If it is too late, debt help centers can help. In principle, lenders are prohibited from granting loans to people at risk of over-indebtedness, but personal responsibility remains high.

Does payment protection insurance make sense?

In most cases, credit insurance is not worthwhile for borrowers. The costs are very high, and there are numerous exclusion criteria. For these reasons, we at Kredite Schweiz generally advise against credit insurance. Legal protection insurance is a good option if you still want additional protection, as it also covers other areas of life.

When does it make sense to refinance a loan?

Refinancing is always advantageous if the interest rate of the new loan is lower than that of the existing loan and the processing fees of the new loan are moderate. If, for example, your credit rating has improved since you initially took out your loan due to a significant pay rise, then refinancing will pay off very quickly. It is also worthwhile for loans with generally high interest rates, such as credit card debt. In Switzerland, borrowers benefit from a regulation in the FLCC, which states that early repayment of consumer loans must always be possible free of charge.