How much can I borrow?

How much you can borrow depends on what your budget leaves free each month, not on your income alone. For consumer credits from CHF 500 to CHF 80’000, Swiss law sets the test. You must be able to repay the loan without touching your Existenzminimum (minimum subsistence level), the part of your income that can’t be seized in debt collection. And the lender must assume you repay the loan within 36 months, even if your contract runs longer. Every lender applies this test to your own figures, so there is no single amount per salary. To see what an amount costs each month, use the loan calculator.

The test in the law

The Consumer Credit Act (Konsumkreditgesetz, KKG) states the aim of the credit check in one line: to avoid over-indebtedness through a consumer credit (KKG, Art. 22). Article 28 then sets out how the check works.

• The test. You count as creditworthy if you can repay the credit without using the part of your income that can’t be seized under the debt collection law (KKG, Art. 28; DEBA, Art. 93).
• Your canton’s rules. That part is worked out with the guidelines of your canton of residence for calculating the Existenzminimum (KKG, Art. 28).
• What is always counted. Your actual rent, your taxes according to the withholding tax table, and the commitments already recorded at the IKO, the information office for consumer credit (KKG, Art. 28).
• The 36-month rule. The lender must assume the credit is repaid within 36 months, even if your contract is longer. The same applies to earlier consumer credits you haven’t repaid yet (KKG, Art. 28).

The IKO may give lenders only the data they need for this check, and they may use it only for this purpose (VKKG, Art. 3). Your contract must then state the part of your income the check was based on (KKG, Art. 9).

Above CHF 80’000, the KKG does not apply (KKG, Art. 7), and neither does its credit check. The guide to taking out a personal loan covers the rest of the law.

What your Existenzminimum includes

Each canton sets its own guidelines, and the office applying them has some room for judgement (Caritas). The canton of Zurich’s guidelines show how it is built. They start from a monthly base amount for food, clothing and laundry, personal and health care, household upkeep, culture and all energy except heating:

On top of the base amount, the Zurich guidelines add your actual costs for:

• rent, including service charges, and heating
• social insurance contributions not already deducted from your salary, and your health insurance premiums
• travel to work, and meals away from home when you can show they cost you more
• maintenance payments you make to people outside your household
• your children’s schooling

These are Zurich’s figures. Your canton’s may differ, so check its guidelines or ask a debt advice office.

What the credit check adds. The KKG also counts your taxes, which the Existenzminimum used in debt collection leaves out (Caritas), and the credits already recorded at the IKO (KKG, Art. 28). Caritas adds that a lender must work with a realistic budget built on your actual spending: health costs including your deductible and co-payments, travel to work, car insurance and tax, leasing payments, and the credits recorded at the IKO and the ZEK.

From the test to an amount

Put simply, the check works like this:

1. Take your net monthly income.
2. Subtract your Existenzminimum, built as above for your household and your canton.
3. Subtract your taxes, according to the withholding tax table.
4. Subtract the monthly payments for the credits already recorded at the IKO, counted as if each were repaid within 36 months.
5. What is left is the most a new loan can take each month. The amount needed to repay the new loan in 36 months has to fit into it.

That last step explains a common surprise. A longer term lowers your monthly payment, but it does not raise the amount the check allows, because the check still assumes 36 months. At Swizeo, for example, CHF 10’000 costs CHF 846.94 a month over 12 months, and CHF 290.81 a month over 36 months. Set the term to 36 months in the loan calculator to see the monthly figure for your own amount.

The law sets the minimum test. A lender can still lend you less than you ask for, or say no. Once you know the amount that fits, put offers for it side by side: see how to compare loans.

Work out your own figure first

You don’t need a lender to get a first idea. Take an evening with your bank statements.

1. What comes in. Your net income as it reaches your account, and any other regular income.
2. Fixed costs. Rent and service charges, health insurance, taxes, travel to work, maintenance payments, childcare, and every loan, leasing contract or card you are paying off.
3. Living costs. What you really spend on food, clothes and the rest, not only your canton’s base amount.
4. A reserve. When debt advisers draw up a budget, they add an amount for unexpected costs (Caritas). Do the same.

What remains is the most a monthly payment should take. Then try amounts and terms in the calculator until the payment fits, with room to spare.

Be honest with your figures, in your own sums and in an application. A lender may rely on what you tell it about your finances, unless your figures are plainly wrong or contradict the IKO. It can ask for your debt collection extract and a salary statement, or other documents that show your income if you are not employed (KKG, Art. 31). The guide how to apply lists what to have ready.

If the answer is nothing

If your budget has no room once your costs are paid, a lender that follows the law cannot lend to you. That check protects you. If bills are already hard to pay, a new loan can make it harder: free debt advice can look at your whole budget with you. See debt help in Switzerland.

Be wary of offers that promise a loan without looking at your budget. The guide to loans «without a credit check» explains why.

How much you can borrow at Swizeo

Swizeo lends CHF 1’000 to CHF 1’000’000 over 6 to 84 months, at a fixed interest rate of 3 % a year for every loan, an effective annual rate of about 3.04 %.

Step 4 of the application asks for your income and costs, and a person on our credit team decides.

Next step

Try your amount and different terms in the loan calculator. It needs no name or ID.