News and guides on credit, leasing, savings and banking services in Switzerland

The 8 essential steps for a first private loan

After several hesitations, you decided to take out your first personal loan. Whether it’s to finance the car of your dreams, get out of a rough patch or help you get started on your personal projects, you’re not alone in making this choice. Indeed, more than 30% of Swiss people have already used private credit. Flexibility and ease of borrowing are often arguments of choice for the consumer.

If in the past you had to go through a bank, nowadays the possibilities of borrowing have multiplied in order to satisfy everyone’s needs. To this end, we invite you to carefully compare the different offers through our many comparators.

But before that, it is essential to get organized and ask the right questions. A credit will probably commit you over several years and inadequate choices could put your projects at risk.

In this guide, we will help you prepare your credit application efficiently in order to obtain it as quickly and easily as possible while avoiding the pitfalls.

1. Ensure your solvency

Before you want to obtain a personal loan, make sure you are not late in making any payments. If you have already taken out a loan, the same applies.

Banking and financial institutions have the opportunity to assess your creditworthiness beforehand in order to determine whether your credit application is admissible and criteria such as the regularity of payments are taken into account.

To find out your personal creditworthiness, you can contact CRIF AG or ZEK (credit information centre)

2. Prepare the necessary documents

As everywhere else, good preparation is the key to success. In addition, you will immediately leave a good impression on the institution responsible for assessing your situation. The necessary documents are generally as follows:

  • Passport or identity card
  • Residence permit for foreigners
  • Last three salary slips

Some institutions or brokers may also request a bank statement, an AVS/AI/LPP pension decision, your other outstanding credits, your family situation or your last tax assessment.

3. Do not increase the number of loan applications

If you ask several banks for a loan within a very short period of time, they can be informed. If the loan application is rejected, it will also be visible to them and could therefore negatively influence the decision of other financial service providers. Please note that your data is available for two years from banks and online suppliers. In order to avoid this situation, we recommend that you use our credit comparators. This way, you can get an overview without appearing in credit information banks such as CRIF and ZEK.

4. Check the interest rate

The interest rate on your loan is decided by the financial institution on the basis of several criteria such as your age, nationality or type of residence permit as well as your financial and professional situation. As already discussed above, creditworthiness criteria are also taken into account. The maximum admissible rate provided for in Art. 9, para. 2, letter B must not exceed 15%. The higher your ability to repay the loan quickly, the lower the interest rate will be.

Online platforms generally offer a better interest rate than banks because of their lower structural costs.

5. Know the difference between the effective and nominal rate

When you want to borrow, you will see two interest rates. The nominal interest rate represents the interest charges to be paid for the desired credit, while the effective interest rate includes processing fees, commissions and other potential costs. It is the latter rate that you need to study.

6. Be honest about your financial situation

Don’t overestimate your ability to repay your loan on a monthly basis. These repayments will consist of interest and principal loaned by the bank. The financial institution that granted you a loan will thoroughly check that you are able to repay your loan.

7. Do not pay unnecessary fees.

A consumer credit application is free of charge, so you don’t have to pay any fees to open a file. However, if you choose online credit, you may be asked to contribute to the cost of authenticating the documents required for the loan application. If a broker asks you to pay an advance of several hundred francs in exchange for the promise of an insured loan, this is actually an unfair practice. Indeed, it is not the broker who decides whether or not to grant a loan but the financial institution.

8. Plan for the unexpected

It is impossible to know what will be done the next day. It is therefore never too prudent to cover your back in the event of a sudden change of situation. For example, you can take out insurance to cover your reimbursements in the event of unemployment, illness or death. In addition, if you suddenly receive a large amount of money, you can repay your loan early. Any overpayment of interest will then be refunded to you if this clause was part of the contract.