Applying for a Personal Loan – As Low-Cost as Possible

Applying for a personal loan at the lowest cost possible is done by improving the factors that affect the interest rate and by choosing the right provider.

Some of the interest rate factors you can influence yourself. In the short term, it is worth making sure you don’t make any mistakes when applying, such as contacting too many providers at once. In the long term (3–12 months or more), it is worth building up as clean a payment history as possible.

To find the right lender, there are qualified credit brokers, but of course, no one can guarantee you the lowest interest rate.

How can you influence the interest rate on a personal loan?

The interest rate on a personal loan is influenced by how high your default risk is estimated to be. Depending on how different lenders assess you, you will therefore receive different interest rate offers.

Each lender has different internal assessment guidelines. The more current obligations and costs you already have, the higher your default risk is from the lender’s perspective, and the higher the interest rate will be. The following factors are included in the interest calculation.

1. Past debt collection proceedings: These increase the interest rate or even lead to the application being rejected.
2. Income stability: Fixed-term employment increases the interest rate, self-employment increases the interest rate, and variable wages increase the interest rate.
3. Payment history: Negative incidents increase the interest rate. Various databases (IKO, ZEK, CRIF, debt collection register) are consulted for information about your payment behavior.
4. Number of loan applications: Multiple loan applications increase the interest rate or even lead to the application being rejected, as they signal financial difficulties. For this reason, you should only apply to one provider at a time.
5. Loan term: Very long loan terms increase the interest rate, as the probability of default increases over time.
6. Loan amount: The closer the loan you are applying for is to your credit limit, the higher the interest rate will be.
7. Demographics: Age and nationality can also lead to a higher interest rate, similar to insurance. Being under 25 or over 65 usually increases the interest rate.

Interest rates can vary greatly for the same person at different lenders because different assessment criteria are used to determine the probability of default.

How can you find cheap personal loan providers?

Finding cheap personal loan providers varies depending on the applicant. To find the right provider for a person, you need to be familiar with the individual lenders and be able to assess where the person best fits the profile. For example, the right lender for someone with excellent credit and a high income is different from someone living on the poverty line.

To find a cheap provider yourself, it is advisable to read as much information as possible about the various providers before submitting an application. Submitting several applications to different providers at the same time sends negative signals and should be avoided. If you want to get an overview of the providers, you can read our comparison article on lenders.

There is always the option of using a credit broker if you don’t want to inform yourself about lenders. In Switzerland, these may not be charged separately. More on this in the next subchapter.

What is the optimal way to apply for a personal loan?

Applying for a personal loan involves the following 5 steps. The Kredite Schweiz team is happy to help you with any questions.

1. Find a credit broker

1. Find a credit broker

The first step is to find a trustworthy credit broker. Alternatively, you can find out about the assessment guidelines of various lenders yourself and contact them directly.

Kredite Schweiz is at your disposal with the application form below if you would like a list of some officially certified and established credit brokers in Switzerland. This service is free of charge and non-binding.

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2. Apply for a loan

2. Apply for a loan

When applying for a loan, the credit broker will need all relevant information from you, such as your personal details, proof of income (wage statement), and your residence status.

For personal loans, the reason for the loan remains a private matter, and there are no restrictions on how it can be used.

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3. Receive a credit offer

3. Receive a credit offer

The lender will now review your application. In Switzerland, you cannot obtain a reputable loan without a credit check, as creditworthiness checks are required by law.

Once your loan has been approved, you will receive an offer stating the exact interest rate that your credit broker was able to secure for you.

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4. Wait out the legally mandated waiting period

4. Wait out the legally mandated waiting period

If you accept the loan offer, sign it and wait until the statutory waiting period of 14 days has expired. This period serves as a 14-day right of withdrawal to protect borrowers and give them the opportunity to change their minds.

A quick loan alternative is only possible for relatively small loan amounts if you do not want to wait for the deadline. Since there is no waiting period for credit cards, you can apply for one that you can receive and use immediately. Some cards offer an extremely fast application process, but the credit limit is, of course, very limited compared to a personal loan. You can find suitable cards in our blog.

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5. Disbursement of the loan

5. Disbursement of the loan

The loan amount will be transferred to the account of your choice after the deadline has passed. From this point on, the repayment period begins in accordance with the terms and conditions agreed in the contract.

What are the requirements for a personal loan?

The requirements for a personal loan are partly regulated by law and partly dependent on the credit institution. The following requirements apply to personal loans (consumer loans) in Switzerland.

1. Creditworthiness: It is prohibited to grant loans that lead to excessive debt. Before concluding a contract, the lender must check whether the customer will be able to repay the loan within 36 months, even if the real term is longer. For this reason, it is not possible to simply apply for a loan without an income, for example.
2. Legal age: It is prohibited to grant loans to minors.
3. No bankruptcy or ongoing debt collection proceedings: Bankruptcy or ongoing debt collection proceedings will result in the loan application being rejected.
4. Residence status: If you do not have Swiss or Liechtenstein citizenship, your residence status will influence the granting of a loan. C permits are accepted without any problems, B permits are more difficult, but sometimes possible with higher interest rates and lower maximum amounts. G and L permits are usually rejected.

What additional costs are incurred with personal loans?

In addition to the total cost of the loan, which is calculated based on the effective annual interest rate, there may be additional fees depending on the lender. These fees may include, for example, origination fees or, in the case of online providers, platform fees. As a general rule, no separate brokerage fee may be charged for loans that fall under the Consumer Credit Act. According to the law, early repayment of the loan must also be possible free of charge.

Personal Loan FAQ