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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