The market for personal loans in Switzerland is growing steadily. Statistics from the Central Office for Credit Information (ZEK) show that the volume is increasing from year to year. According to ZEK, the credit volume of private households in Switzerland amounted to around 8.1 billion Swiss francs in 2019. This is an increase of over 5 percent compared to the previous year. The average loan amount for new cash loans was just under 34,000 Swiss francs and the average term was 54 months.
In addition to Cembra Money Bank, Bank-now and Migrosbank are among the market leaders in the private credit sector. However, the recognizable growth is attracting other providers to the market. New providers are Lend, Creditgate24, Cashare, some of which are struggling with difficult access to investors and customers. Also new on the Swiss market is FINROX, a Fintech company specializing in credit and financial services and managed by experienced and dynamic experts from the financial industry. FINROX offers a novel, transparent and independent credit comparison in Switzerland. This enables the borrower to quickly access the optimal loan.
What is a personal loan?
Personal loans to individuals, which do not serve any professional or commercial purpose, usually include cash loans, overdrafts, loans and certain forms of leasing, such as car loans. In Switzerland, the term “personal loan” refers to consumer loans. They are subject to the Consumer Credit Act (KKG) up to an amount of CHF 80,000. The maximum permissible annual percentage rate of charge for personal loans is set by the Federal Council. At present, this is a maximum of 10 percent for cash loans and 12 percent for credit cards. Within this framework, credit providers set the credit interest rate individually after a creditworthiness check of the customer has been carried out. Within this framework, credit providers seek their competitive advantage, in particular through increased efficiency and, most recently, digitization.
Online search and credit comparison in Switzerland
Borrowers are becoming increasingly digitally affine and are taking advantage of the benefits of online loan comparisons. For example, anyone who needs a car loan to buy a car uses online searches. Thus one finds the suitable credit, the best possible interest rate and the best conditions with few Klicks. Owing to the credit comparison the customers do without the time-consuming search, must not run from bank to bank and receive custom-made results free of charge and fast.
A credit comparison calculator requires only a few basic data, like the desired credit amount and the desired running time, in order to supply meaningful results. By adjusting the values, you can quickly determine different scenarios regarding the term and the loan amount and thus calculate the optimal monthly rate.
How are credit costs calculated?
All credit costs incurred are calculated using the effective annual interest rate. Here is an example: with a loan amount of 10’000 Swiss francs and an interest rate of 7.9% for the 12-month term, the interest costs amount to a total of 417.95 Swiss francs; with a term of 24 months they amount to 813.85 Swiss francs and with 36 months the interest cost amount increases to 1’219.35 Swiss francs for the entire term. The monthly rate remains constant. This means that the longer the term, the higher the interest costs. Therefore a fast repayment is usually advantageous.
The advantages of an online loan
A high doctor’s bill, a major purchase, car purchase or an unexpected event are often reasons for taking out a loan if the necessary money is currently lacking or needs to be saved. When the decision to take out a loan is made, the search for the best financing conditions begins. Online platforms make this possible within seconds. The advantages are manifold: there is maximum transparency, you can get a quick overview, the online credit comparison can be carried out at any time (24/7), communication with the credit provider is quick and easy, commitments are usually made within a day and you save a lot of time and money.