Getting it all wrong when applying for personal loans is easier than many of us are willing to admit. Following these tips can help you avoid many of the possible traps associated with personal loans:
- Compare Swiss personal loan offers. Heading to the nearest bank or a familiar online loans platform may be convenient, but taking the time to find the most affordable loan can easily save you hundreds of francs.
- Online loans are typically the most affordable option in Switzerland. Just note that the best offers are also the most difficult to get. The rule of thumb is: the cheaper the loan, the stricter the creditworthiness criteria.
- Before you apply for a loan, always check your creditworthiness and get informed about whether you have an excellent chance of getting a loan (taking your financial situations and credit ratings into account) before applying. Never apply for a loan unless you are sure that your application will be approved, because getting rejected after applying for a loan will generate a negative entry in your credit report at the ZEK (the Swiss central credit bureau). Having a poor ZEK rating makes it more difficult to get any type of consumer loans or credit from Swiss lenders.
- For the same reason, you should avoid making a large number of loan applications to different lenders (although you should get as many unbinding quotes as possible before applying). Doing this will help you to avoid unnecessary entries in your ZEK credit history.
- Depending on your creditworthiness, you may pay more or less for the same loan from the same lender. The moneyland.ch personal loan comparison uses the maximum effective interest rate you could possibly get when comparing offers. Both the highest and the lowest possible interest rates are shown in the comparison. While the comparison serves as an initial guide, you should request unbinding quotes from the lenders of your choice to determine the exact rates you will get before making your final decision about whether to apply for a loan.
- Choose the shortest loan term available. The more time you take to repay the loan, the more the loan will cost. It is important to note that the Swiss consumer credit law gives you the right to repay a personal loan at any time without paying a penalty fee. Repaying loans early, when possible, can help you save a lot of money.
- Do you really need a personal loan? Think this over and then think it over again. Personal loans are an expensive service and you should only get one if there is absolutely no alternative.
- Buying a car: Personal loans are often more affordable than car leases. However, paying for cars in cash instead of loans is the cheapest option of all.
- Refinancing: Personal loans are relatively easy to terminate, but lenders generally charge a fee when you refinance a loan with a new loan from a different lender. However, refinancing your personal loan with a cheaper loan can still save you money, in some cases.
- Two-week waiting period: In Switzerland, you have the right to cancel a loan agreement within 14 days from the date on which your application is approved, as per the consumer credit law. This waiting period gives you time to reconsider whether or not you really need the loan, and to cancel the loan contract if you so choose. To prevent logistic disasters, Swiss lenders generally do not pay out the loan until the 14-day period has passed. It generally is not possible to obtain instant personal loans.
- Beware of fraudulent lenders. The Internet and social media channels like Facebook are chock-full of fraudulent loan offers. Stay away from instant loan offers and ridiculously cheap loans as these are generally scams. Most of all, never send money to purported lenders in advance of receiving a loan.
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