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My loan application was rejected. I am now blocked for further loan applications

My loan application was rejected

My loan application was rejected. Am I now blocked for further loan applications?

Even if your own considerations were so extensive, it can still happen that the loan application is rejected. This results in poor creditworthiness. But are you automatically blocked for further loan applications and will you never be able to get a conventional loan again?

My loan application was rejected

Collection of data at ZEK

It is correct that the data is recorded at the central office for credit information. This means that not only has the presence of a loan application been registered, but it has also been noted whether the loan was rejected or approved.

Payment arrears for bills, other loans or debt collection can also be found there, giving a comprehensive overview of a person's creditworthiness. The data are not all saved for the same duration. If the loan application was rejected, the corresponding entry remains in the database for two years.

What happens when I apply for a new loan?

It is open to everyone to apply for a new loan even after one has already been rejected. The entries in the ZEK are now decisive for whether the application is approved or rejected or whether the conditions are adjusted accordingly. Depending on the reason for the rejection and the type of risk awareness of the bank concerned, the further course of action is different.

If a loan application was rejected because credit card debt enforcement or dunning procedures were already pending, the loan application is usually not approved. If the first loan application was rejected because of less difficult matters, it may well be that the new application is approved.
In principle, however, any entry in the ZEK can have the following effects, among others:

    • bad credit rating
    • the possible rejection of the loan application
    • if the application is approved, a higher interest rate
    • Limitation to a lower loan amount possible if approved

It is therefore important to always make a realistic loan application and to know your own credit rating or to assess it correctly. This will avoid disappointment after the application has been made, and will also prevent you from receiving another entry in the register, which can also have a negative impact on all financial projects for the next two years.

It can be helpful not to send a loan request directly to the bank, but rather to first commission an independent advisor to do so. He can assess the creditworthiness and weigh up various options for the further procedure.

After the rejection, you should contact the ZEK and obtain a free self-assessment. This means that in future you will know which entries are available about you and what has led to the loan application being rejected. Please never switch to providers who allegedly grant loans without a credit check, here you fall into the trap of fraudsters!

In summary: After the rejection, not everything is lost

Before applying for a loan, find out about your creditworthiness in order to know which entries are available. If a loan application is rejected, it depends on the respective reasons whether another application can be successful. The entries in the ZEK for rejected loan applications remain for two years.

Would you like to compare the conditions for the personal loan in advance? Here, in ours loan comparison you have the opportunity to do so!

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Personal loan: Every third Swiss already had a personal loan

Personal loans

Financing Fast Spending: Personal Loans As A Way To The Debt Trap?

A personal loan should help to bridge a financial bottleneck and is quite manageable with a maximum repayment period of 36 months. He has a bad reputation, according to many Swiss people, that the personal loan would lead directly into the debt trap. Nevertheless, many Swiss have already taken out such a loan.

Personal loans

Help or trap?

Surveys in 2017 had shown that every third Swiss had already taken out a personal loan. Nonetheless, two thirds of the Swiss believe that taking out a personal loan is the first step towards a debt trap and only leads to thoughtless consumption. In addition, many banks are assumed to simply rip off the borrowers and not to provide real help in a financial emergency.

Bridging a financial bottleneck is at the forefront of personal loans. For example, if a new car is to be bought, many Swiss people use a personal loan. At least around 50 percent said in surveys that they had already financed a vehicle with a personal loan. 

However, one in five also stated that they had used a personal loan to settle debts or open bills. Here the fear of the debt trap may certainly be real, because if other debts are paid off when the debt is raised, a worst-case scenario can lead to a vicious cycle that has only one end: total over-indebtedness.

However, anyone who takes out a personal loan, for example to finance the purchase of new furniture or a new vehicle, does not restrict their own reserves or the monthly financial scope by purchasing these goods too much and can still fulfill a wish.

This is what my borrower thinks about personal loans

People who have already taken out a personal loan are generally more open and positive about this financing option than people who only know the loan in theory. You have fulfilled a wish, repaid the loan and everything is fine. They believe that personal loans are a real help. Every second person who had already taken out and repaid a loan stated in the survey that they were using a personal loan again.
Personal loans are most commonly used to finance the following goods and products:

    • Initial and continuing education
    • vehicle financing
    • Furniture
    • Purchase of electronic devices
    • Travel and vacation

However, it also shows that personal credit is rarely used for the latter three points. Furniture and electronic devices in particular are often financed directly by the dealer through installment payments. It is also noticeable that it is mainly men who take out a loan to finance certain wishes, women tend to use the savings or plan more long-term and save on large purchases.

Conclusion: Personal loans are suitable for financing large purchases

Even if popular opinion says that a personal loan would quickly lead to a debt trap, borrowers don't see it that way. Of these, one in two would take out a personal loan again, because the experience with it is so positive. 

A personal loan does not automatically lead to debt, so it is a good way to bridge a financial bottleneck. 

It is important that you have the personal loan in advance Check credit comparison, because the offers for this vary depending on the bank.

Source: comparis.ch

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Personal loan: choose the right loan term

Consumer Credit Act

Personal loan: choose the right loan term

In most cases, anyone interested in a loan assumes that the term should be as short as possible. It is assumed that this could save costs because the interest would be calculated for a shorter term. However, there are cases in which a short term is even a problem.

Consumer Credit Act

Save by repayment

The popular opinion about loans and optimal terms can easily be summarized: The shorter the term, the cheaper the loan has to be. But that's a mistake! At least in some cases, a runtime that is too short can be problematic rather than helpful. But: If you tend to have a longer repayment period when concluding the loan contract, you can still redeem your loan earlier. 

The interest that would have accrued for the remaining term then expires. The consumer credit law stipulates that it must be possible to repay the loan before it expires, but this procedure must not make the loan more expensive. The outstanding loan interest that would have accrued for the entire term then expires. The point is that lawmakers want to ensure that borrowers don't face any obstacles if they want to pay off their debts earlier.

Paid too late? Beware of default interest!

When applying for a loan, it is checked whether the applicant will be able to repay his loan within 36 months. This is intended to provide some protection against over-indebtedness. Important: The term of the loan should always be calculated so that it can be repaid without any problems. For this purpose, a budget is drawn up that includes all income and expenses as well as a buffer. Two variants are possible:

    • The term is chosen longer than necessary
      In the course of repaying the loan, the borrower notices that he has additional financial resources or that his monthly financial scope is greater than expected. He can redeem the loan prematurely, the interest that is still due for the payment months that are now no longer applicable.
    • The term is too short
      There is sometimes a problem here: the borrower cannot meet his payment obligations. With a short loan term, the monthly burden of principal and interest payments increases. If these cannot be mastered, there will be delays in payment and thus due interest will be due.

Default interest makes a loan more expensive and is also registered with the central office for credit information. In turn, the creditworthiness of the person concerned deteriorates sustainably and future borrowing can also be problematic or very expensive.

In summary: good planning of the loan term is important

Please plan a sufficiently large buffer in addition to the regular expenses when planning the possible loan. What if the car breaks down or needs renovation? Such expenses are often forgotten in the monthly planning. In any case, prevent default interest from being incurred; in agreement with the lending bank, the loan agreement may be changed again and the term may be extended. However, this also carries the risk of a higher interest rate.

Here you can see the offers for a personal loan in loan comparison use and find out if this loan option suits you!

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Consumer Credit Act: An overview of the most important things

Consumer Credit Act

Does the Consumer Credit Act protect against over-indebtedness?

The consumer credit law is designed to protect consumers from possible over-indebtedness. It also protects banks and credit institutions from possible default on their borrowers. Important: The consumer credit law (KKG) regulates the commercial granting of loans!

Consumer Credit Act

Then the consumer credit law applies

The consumer credit law applies to different types of contracts, all of which are subject to the same conditions:

    • for private use only
    • Loan amounts between 500 and 80,000 Swiss francs
    • Loan term for more than three months
    • Credit with no collateral deposited

The consumer credit law includes, for example, personal or consumer loans, credit cards, overdrafts and many other types of loans. But even if the KKG does not apply, certain laws apply. The right of withdrawal may cease and the borrower may not decide against the loan within the next 14 days after the loan has been approved.

The aim of the consumer credit law is to define rights and obligations and thus keep risks and payment defaults as low as possible. It includes the following points:

    • Advertising bans for so-called instant loans and other aggressive offers

The credit industry has defined what aggressive promotions are. These include instant loans that are said to be paid out within a few minutes. You are not serious!

    • Mandatory examination of the applicant's creditworthiness and creditworthiness

The borrower must be able to repay a loan within 36 months, but must also be able to meet his minimum living requirements. In order to obtain the relevant information, the central office for credit information or one of the various credit bureaus is interviewed.

    • Compliance with the maximum interest rate

The maximum interest rates are currently capped at 10 percent by law.

    • Regulations for early repayment of the loan

Consumer loans may be repaid before the credit expires. Interest for the unused credit period will then be waived.

    • Cancellation rights of borrowers

Borrowers have the right to change their minds. The loan is therefore only paid out on the 15th day after the positive decision in order to preserve the 14-day right of withdrawal.

    • Lenders' reporting requirements for approved loans

Every credit has to be reported! The information point for consumer credit must include the borrower's personal details, the number of installments, the start and end of the contract, repayment rates and any late payments.

Conclusion: The consumer credit law protects consumers and banks

The consumer credit law is intended to protect both consumers from over-indebtedness and banks from payment defaults. Various data must be obtained from the bank so that a loan can be legally granted. However, if the credit does not fall under the definition of the consumer credit law, other laws apply. This can include, for example, that the cancellation period does not apply and that once a loan has been committed, it must also be repaid as agreed.

You are planning to take out a loan and want to compare the personal loan offers and for that a loan comparison use?

Source: comparis.ch

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How does the credit rating affect my loan application

How does the credit rating affect my loan application

How does the credit rating affect my loan application?

As a rule, creditworthiness is only associated with the granting of loans. It also plays a role in online payments! Banks only decide whether a loan application is approved or rejected after the credit rating has been checked.

How does the credit rating affect my loan application

Wrong assumption: bad payment behavior has no consequences

Bad payment behavior will never be without consequences, that much is clear. It can be assumed that around half of all Swiss people believe that a warning can be paid and that there are no further consequences. But far from it! It is rather the case that a delay in payment is registered directly and has an impact on the overall creditworthiness. Of course, such entries have a particularly negative effect when it comes to granting loans. These are rejected or only approved in a low amount if poor payment behavior has been certified.

The following two terms are used to assess creditworthiness:

    • credit rating
      The creditworthiness provides information about whether the customer can pay. If his current budget allows all income and expenses that are compared to the fact that the remaining amount can be used to repay a loan, this should be assessed positively. The possible loan amount is also based on this. Important: In order for the creditworthiness to be checked in the first place, the applicant must have a freely disposable income, be of legal age and be able to repay the loan in 36 months.
    • credit-worthiness
      Here the probability is calculated whether the customer will repay the loan. It is about its trustworthiness when it comes to payments, using open liabilities and even debt enforcement that has already been completed. In addition, age, nationality, place of residence and the frequency of changing jobs also play a role. Banks get the necessary data from creditworthiness databases, debt enforcement offices and the central office for credit information.

Intrum Justitia, Bisnode, CRIF and Creditreform are the major credit bureaus in Switzerland, but they are not only asked for information when granting loans. Inquiries are also made here when it comes to online orders and payment in installments or by invoice. Even the wish for a new cell phone contract is registered here! The creditworthiness is also negatively influenced by slow payments, it does not even have to be reminded. Such a rating is intended to protect the borrower from over-indebtedness. At the same time, the bank naturally wants to protect itself and protect it from default.

How creditworthiness influences lending

In summary, it can be stated that the creditworthiness is significantly involved in the decision on a loan. Credit approval or refusal depend on it, with all banks applying different rules for assessing the applicant's creditworthiness. 

They also do not allow themselves to be looked into the cards and do not publish such regulations. Tip: Before you make a loan application, it makes sense to get an overview of your own creditworthiness so that no rejected loan application further deteriorates the creditworthiness.

If you have one Compare personal loan you can do it here without applying for a loan!

Source: comparis.ch

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Personal loan savings potential: Why a redemption can be worthwhile

Personal loan savings potential: Why a redemption can be worthwhile

Personal loan savings potential: Why a redemption can be worthwhile

The interest due on personal loans is currently at an all-time low. Interest rates are currently just 4.5 percent, provided that they have a corresponding credit rating. For borrowers, this means that paying off their existing loan can be worthwhile.

Personal loan savings potential: Why a redemption can be worthwhile

Switching providers is worthwhile

A precise comparison of the conditions is not only worthwhile when you take out a new loan. At the moment, interest rates are so low that it can also make sense to compare an existing loan with other offers and that it is worth changing the loan provider. If a new loan agreement can be concluded at lower interest rates, it is worthwhile in any case, especially with outstanding loan amounts and with longer terms.

The consumer credit law offers the opportunity to change providers, because it is said here that personal loans can be redeemed at any time and without giving specific reasons. No additional fees may apply. The scheme allows loans to be redeemed early and transferred to another lender. The savings potential is large and depends primarily on the interest rate and the remaining credit amount.

It makes sense to check beforehand

Please do not prematurely replace and change providers, but subject your project to a thorough examination. In some cases, the providers lure with very low interest rates, but only offer so-called shop window prices. This means that when you take a closer look, the interest rates are significantly higher. Independent consultants can assess whether it is just a tempting offer or whether the offer is realistic and serious.

Also remember the entry at the central office for credit information. Credit applications are reported and registered there, rejected loan applications are saved for two years and can be viewed by all banks. For this reason too, the previous comparison is important! It is best to do the following:

    • Define the remaining loan amount and the term of the existing loan as well as the current interest rate to be paid.
    • Find various offers from reputable credit institutions that are suitable for you.
    • Consult an independent advisor or try to compare yourself. What would be the interest you would have to pay for the loan amount that is currently to be repaid?
    • If the evaluation is positive: approach the new bank and submit a loan application.

You no longer have to worry about repaying the old loan, as a rule the new bank will take care of that. It cancels the existing loan and replaces the previous bank. With the loan amount that you receive from the new bank, the existing loan is replaced in one fell swoop. Then you pay the agreed installments to the new bank.

Conclusion on the loan repayment

Replacing the loan can make sense if the existing loan turns out to be too expensive and there are offers with significantly lower interest rates. An independent advisor can help you with a comparison and let you know whether it is worth repaying the old loan. Again, you can have one Use credit comparison and decide whether a change makes sense.

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Personal loan: 5 tips for borrowing

Personal loan: 5 tips for borrowing

Personal loan: 5 tips for borrowing

With a personal loan, short-term payment bottlenecks can be bridged and purchases made in the range of 500 to 80,000 Swiss francs. The personal loan, also known as a small or consumer loan, should not be taken up prematurely. The following tips also help you keep your finances under control.

Personal loan: 5 tips for borrowing

1. Determine creditworthiness yourself

First of all, it is advisable to find out about a possible loan amount. On the one hand, a budget is drawn up for this, in which all income and expenditure are included. A buffer for unforeseen expenses should also be included. The amount that remains at the end can be used for a loan or for repayment.

In the process, you should also find out about your own creditworthiness. Have you already submitted a loan application that has been rejected? Then this rejection will be saved for around two years at the central office for credit information, where all lenders can view it. The credit rating determines the amount of the loan, if it is granted at all, and the interest rate. The worse the credit rating, the higher the interest rate will be.

2. Pay attention to serious offers

Unfortunately, the financial market is full of dubious offers that appear lucrative at first glance. The instant loan that is paid out in a few minutes? Sounds good, but it's not. It is a fraud, and by the way, even advertising for such an instant loan is prohibited by law.

Dubious providers often advertise with low interest rates and high amounts of credit, with a settlement without a credit check and with the fact that they can accelerate lending if an advance payment is made. Serious providers do not make such promises!

3. Don't finance short-lived products with credit

Important rule of thumb: The term of the loan should in any case be shorter than the life of the product financed with it. It is therefore not recommended to finance a vacation with a personal loan, for example, because here you are already caught up in everyday life if you still have to pay off the loan installments. Cars, renovations or new furnishings are more suitable for personal loan financing.

4. Keep an eye on costs

Of course, the personal loan is not in vain and costs fees that the borrower demands in the form of interest. The lower the borrower's credit rating, the higher the interest rate. A maximum of 10 percent is possible as an interest rate, here the legislator has capped the interest rate.

5. Better bet on personal loans

The personal loan has several advantages over other forms of credit. On the one hand, the aforementioned maximum interest applies. On the other hand, financed goods and products belong directly to the buyer, while, for example, in the case of a purchase in installments, the goods remain the property of the seller until full payment. The personal loan protects the borrower against over-indebtedness because it is only granted after a thorough credit check. If the creditworthiness is negatively assessed, a reputable lender decides against lending.

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Personal loan: An overview of the most important things

Personal loan: An overview of the most important things

Personal loan: An overview of the most important things

The personal loan is a good option if a financial bottleneck is to be bridged. Whether a renovation is planned, a new car is to be bought or whether the long-awaited vacation becomes more expensive than expected: With the personal loan, such wishes can be fulfilled flexibly.

Personal loan: An overview of the most important things

That says the consumer credit law on personal loans

The KKG (consumer credit law) also describes the personal loan as a small loan, which already says something about its definition. Because this is an interest-bearing loan that can be granted between 500 and 80,000 Swiss francs and has a term of at least three months. The personal loan is not secured by special collateral and may only be used for private purposes. As a result, companies cannot apply for a personal loan. There are two types of these small or consumer loans:

    • Offline loans
      The borrower applies for the loan in the bank branch.
    • Online loans
      The borrower uses an offer from a direct bank and takes out the loan online.

Many banks now offer both types of loans, and online loans are increasingly being processed through crowdlending.

The personal loan is suitable for this

The personal loan has advantages and disadvantages that must be assessed individually. It is important that the amount of the loan fits your own budget and the options for repayment. The personal loan is particularly suitable if you want to buy a long-lasting product, such as furniture or a new car. In addition, the loan is used to bridge a short-term payment bottleneck, which means that it must be clear that the repayment of the loan must be on a secure footing.

With a personal loan, interest costs can also be reduced if an existing loan is rescheduled. Furthermore, it is often used to finance training and further education that cannot be paid for otherwise.

However, the personal loan is not suitable in the following cases:

    • Acquisition of short-lived products
    • Investment in products if there is permanent poor solvency
    • Purchase of very expensive products and goods or for house building

A question of solvency

Particularly important: the granting of a personal loan depends on how good the credit applicant's credit rating is. This means that their solvency is checked and assessed so that they themselves are protected against the consequences of overindebtedness and so that the lender is also safe from default. The loan is only granted if the creditworthiness is rated as sufficiently good.

In order to be able to check the creditworthiness, the applicant not only submits his loan application, but also evidence of any risk factors. In addition, nationality and residence status, age and frequency of job changes are checked. Loans are only granted if the applicant is of legal age and has a regular income. Furthermore, the information from the creditworthiness databases is important. Open debt enforcement exclude the granting of a personal loan as a rule, completed debt enforcements at least reduce the creditworthiness.

The creditworthiness is also relevant for determining the interest rate: the poorer the creditworthiness, the higher the interest rate. Legally, the interest rate is capped at 10 percent. Certain risk factors therefore ensure that the interest rate becomes higher, even if the low interest rate phase is still raved about.

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Crowdlending: This is how loans work without banks

Crowdlending: This is how loans work without banks

Private individual as lender: quick lending with minimal risk?

The Internet plays an essential role in this form of lending. In crowdlending, also known as P2P (peer-to-peer), several individuals grant loans to another individual or to a company. There are various online marketplaces that take on an intermediary position, so to speak. For loan seekers, there is an opportunity to get a loan despite poor creditworthiness, while lenders can see this as a savings investment.

Crowdlending: This is how loans work without banks

This is how crowdlending works

Both sides register on the corresponding internet platform, whereby there is a different registration mask for loan seekers than for lenders. The loan seeker presents his project and the future lenders decide whether they want to invest in it. If there are enough participants for the investment, the contributions that everyone makes are combined into a loan amount. Of course, the operator of the online marketplace also receives a certain amount as a fee, because only then can the offer work.

Applicants have to provide various information about their situation, on the one hand the financial, on the other hand the personal life situation is examined. This should make it possible to assess the applicant's creditworthiness. A type of rating is carried out, which shows the risk of a credit default. After all, investors don't want to have to give up their money and profits! In addition, the individual credit default risk is important for the amount of the interest rate. The higher the risk, the higher it is. If the credit decision is positive, the project is presented to potential investors who only need to register to participate. Their identity is checked, after which it is possible to invest on the platform.

Advantages and disadvantages of crowdlending

Crowdlending has many advantages for both parties involved:

    • fast lending and transparent process
    • Lending also possible with poor creditworthiness
    • Lending also possible with past debt collection
    • Attractive returns possible for investors
    • Risk minimization thanks to an internal rating
    • Supervision of the project is carried out by platform operators

Nevertheless, there are of course disadvantages. These consist of the following points:

    • Loss of investment if the borrower is unable to pay
    • possible defaults due to late payments possible
    • lower return possible due to early loan repayment
    • high rejection rate for loan seekers
    • high interest charges with poor creditworthiness
    • sometimes long waiting times for a decision

Disadvantages are particularly evident in a direct comparison with a personal loan. The amount of the loan amount becomes clear very quickly with the latter, but with crowdlending it may be that the loan cannot be obtained in the desired amount because there are not enough investors. However, the search for investors takes some time, so considerable waiting times must be expected. Who needs a loan quickly is rarely well advised with crowdlending.

Important: The loans that are granted in crowdlending are not subject to the consumer credit law and its special protection. This means that nobody is protected against over-indebtedness here. In addition, higher loans are difficult to obtain, and the risk is usually too great to grant a large sum.

Conclusion

Crowdlending is therefore particularly worthwhile for those who are looking for an alternative to traditional bank loans and want to borrow money in an uncomplicated manner, although the loan amounts should not be too high.
If you want to compare crowdlending with personal loans, you've come to ours loan comparison precisely!

Source: comparis.ch

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Can I take out a personal loan despite being managed?

Can I take out a personal loan despite the debt enforcement process?

Take out personal loans: credit check with obstacles

In general, banks in Switzerland are obliged to subject every loan applicant to a credit check. This is intended to protect the bank from a possible loss, on the one hand, and to protect the borrower from over-indebtedness, on the other. In addition to the actual creditworthiness, the creditworthiness is also checked.

Can I take out a personal loan despite the debt enforcement process?

How is the credit rating checked?

As part of the credit check, an attempt is made to determine whether the applicant will be able to meet his payment obligations. That means your reliability is checked here! For this purpose, the credit institutions contact the following information points, among others:

In addition, the potential lenders contact you directly and require the submission of various documents such as wage statements, rental contracts, maintenance obligations, etc.

Problems with ongoing debt collection

With ongoing debt collection, it becomes difficult to get a credit rating. In Switzerland, it is legally regulated so that everyone can collect a debt without even needing proof. An ongoing debt enforcement procedure therefore usually leads to the loan application being rejected.
Important point: Many loan providers advertise that they would grant loans despite debt collection. These are dubious offers that you should stay away from! Such promises appear in particular in the case of alleged instant loans, which, however, are not only little confidence-building, but are simply illegal.

Creditworthiness continues to be poor

Even if it may be unfair, the creditworthiness remains impaired even after the debt collection has been completed. The reason is that the credit providers assume that they will continue to have poor solvency in the future and that this will significantly increase their risk. But you want to receive your money on time!

It cannot be said in general whether and how a lender evaluates the creditworthiness of the applicant who has already had a debt collection. The rules for this are different and sometimes very strict, but there is no credit institution that gives an insight into its assessment practices. If a loan is granted, which is generally not excluded, the interest rate will be significantly higher in most cases.

Tip: Submit multiple loan applications to different banks at the same time. Rejected applications are stored at the central office for credit information and are visible to all banks wishing to inspect them for two years. If an application is rejected while a second bank is checking the creditworthiness, the bank has no insight into the rejection and does not automatically rate the credit rating worse.

Tips for applicants

If you want to apply for a loan, you should at least have basic information about your own credit rating. Therefore, contact the usual credit bureaus:

    • Bisnode
    • Creditreform
    • CRIF
    • Intrum Justitia
    • etc.

Here it is possible to find out about your own creditworthiness in order not to be completely surprised later because certain entries can be found there. As a basic principle, you can assume that the creditworthiness after completing the debt collection and if there are no other occurrences is generally not that bad, and that the approval of a loan application is therefore within reason.

You are welcome to view the offers in our privateloan comparison and find the best deals on taking out your own loan.

Source: comparis.ch

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