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What would happen in a worst case scenario where a person cannot repay a loan (because of financial changes, some misfortune, etc.). Are the loan repayments insured? Would you have to get a new loan to refinance the first? Can anyone in this forum help me with this?
Good day,
In priciple you are obligated to repay the loan and related costs within the pre-agreed loan term. In Switzerland loan defaults are relatively uncommon.
Only a handful of lenders will forgive your debt when some calamity makes it difficult for you to repay your debt - due to an accident or loss of employment, for example. The interactive loan comparison tool on moneyland.ch lets you find the loans which include this benefit. All Swiss lenders forgive remaining debt in the event of the borrower's death.
You can also take out loan protection insurance to insure your loan repayments against other scenarios. Just note that insurance coverage comes at additional premiums which can significantly add to the cost of your loan. It is also important to study the exact terms and conditions of an insurance policy so that you fully understand what scenarios are actually covered before you sign up.
Getting additional loans to cover the regular repayments for your current loan is best avoided because doing so can radically multiply your overall debt and lead to a debt cycle.
