Discretionary income, with regards to loans, is the portion of your income which is available for loan repayments. Discretionary income is a key factor in determining creditworthiness. You can only get a loan in Switzerland if your monthly loan repayments would not exceed your discretionary income.
In most cases, discretionary income is calculated by subtracting the minimum income you would need to survive on (the poverty guideline) from your total net income. However, there are certain types of income which cannot be seized to repay debts (OASI pensions, IV pensions, and welfare benefits, for example). Incomes from these sources cannot be included in your net income for discretionary income calculations. You can find more information about in the moneyland.ch guide to Swiss debt capacity requirements.
Example: If you had seizable net income of 4000 francs per month, and your minimum income requirements as per the poverty guideline are 3000 francs per month, your discretionary income would be 1000 francs per month. That means you could get a loan as long as the required repayments are not more than 1000 francs per month. That would be the case, for example, if you got a 31,186-franc loan with a 10 percent annual interest rate and a 36-month loan term.
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How creditworthiness is determined
