The Costs of Swiss Personal Loans Explained

The Swiss Consumer Credit Act sets limits for the maximum cost of a loan. In 2024, the maximum interest rate which lenders can charge is limited to 12 percent for cash loans and 14 percent for credit card balances. (Before July 2016, the maximum rate was 15 percent. You can read our news update here).

Many Swiss credit card issuers charge the maximum permissible interest rate for credit card balances. Because of the high interest rate, carrying a balance on your credit card is not recommended. A personal loan can often provide the cheaper solution, particularly if you have excellent credit.

Loan interest rates compared

Swiss interest rates for cash loans are currently between 4.5 percent and 10.95 percent (at least the maximum interest rates will continue to rise in 2024). For homeowners, there are sometimes slightly lower interest rates. The loan amount and the term can also influence the interest rate, depending on the provider. 

Using the effective interest rate, the loan term and the loan amount, you can calculate the full cost of a loan. The loan calculator from moneyland.ch reduces this process to a few clicks.

The formula used by all Swiss lenders to calculate interest charges is the same formula which is used by the unbiased loan comparison and loan calculator by moneyland.ch. On the results page of the comparison, you can see the exact costs of each loan offer, as per this formula.

Cost differences between loans

The best way to show the big differences is to use a cost example.

A loan in the amount of 30,000 francs with a term of 48 months costs a total of 3650.40 francs with an effective annual interest rate of 5.9 percent. At the end of the term, the borrower must therefore have repaid a total of 33,650.40 francs to the credit company.

With an offer with an effective annual interest rate of 10 percent, on the other hand, the loan for the same amount and the same term costs 6225.60 francs. The more expensive loan therefore costs around 2575 francs more.

Comparing offers helps you save

Comparing loan offers before you settle on a loan is important. What makes things more complicated is the fact that not all applicants will be eligible for the cheapest loans. The rule of thumb is that the cheaper the loan, the better the creditworthiness of the borrower must be.

The criteria for the cheaper loans are usually somewhat stricter. Some of the important criteria are accounted for in the moneyland.ch personal loan comparison. Only loans that match the information you enter will be included in the results list.

Beware of long loan terms

Avoid taking out long-term loans whenever possible. The simple reason: The longer the loan term, the more expensive the loan.

An example can help to clarify this: If you borrowed 20,000 francs at an effective annual interest rate of 7.9 percent over a 12-month term, that loan would cost you around 836 francs, the equivalent of 4.2 percent of the amount you borrowed.

Getting the same loan (effective annual interest rate of 7.9 percent) with a 24-month term would cost you 1628 francs (equal to 8.14 percent of the loan). That means you would pay more than 790 francs more to borrow the same amount of money over twice as long a loan term.

If you opt for a loan term of 36 months, you had better have deep pockets because the same loan (effective annual interest rate of 7.9 percent) will cost you a total of 2439 francs. That corresponds altogether (nominally) more than 12 percent of the credit sum.

More on this topic:
Unbiased Swiss loan comparison
Loan calculator: find the true cost of loans
Swiss personal loans: things you should know
Car leasing in Switzerland: key tips
Online loans in Switzerland: a closer look
Effective annual interest rates explained
Swiss consumer credit law explained