Loans for young adults and apprentices

From the age of 18 you can sign a loan contract on your own (ZGB Art. 13 and 14). Under 18, a consumer credit contract is valid only with the written consent of your legal representative, usually your parents, given at the latest when you sign (KKG Art. 13). Beyond that, the Consumer Credit Act sets no age rule: each lender decides its own age limits. The credit check is the same for everyone. You must be able to repay without using the part of your income that can’t be seized in debt collection, and the lender must assume you repay within 36 months (KKG Art. 28). With an apprentice’s wage, little or nothing may be left once that test is applied. Before you borrow, make a budget: the budget examples of Budgetberatung Schweiz show how far an apprentice’s wage goes.

Under 18: what you can sign

• A loan needs written consent. If you are a minor, a consumer credit contract needs the written consent of your legal representative, at the latest when you sign (KKG Art. 13). The same rule covers leasing and cards with a credit option (KKG Art. 8). Your parents represent you as far as their parental authority goes (ZGB Art. 304).
• Without that consent, the contract is void. You then repay the amount you received by the end of the agreed term, in equal instalments, and you owe no interest and no costs (KKG Art. 15).
• The general rule is looser, but not for loans. In general, a minor who is capable of judgement can take on obligations only with the consent of the legal representative, and that consent can be given expressly or tacitly in advance, or as approval afterwards (ZGB Art. 19 and 19a). For a consumer credit the Act asks for more: consent in writing, by the time you sign (KKG Art. 13).
• Your wage is yours to manage. What you earn through your own work is under your own management. If you live with your parents, they can ask you for a fair contribution to your keep (ZGB Art. 323). Without consent, you can still handle the small matters of everyday life (ZGB Art. 19).

From 18

You are of age at 18 (ZGB Art. 14). From then on, if you are capable of judgement, you can sign contracts alone (ZGB Art. 13), loans included. No one else needs to agree.

The Consumer Credit Act (Konsumkreditgesetz, KKG) and its ordinance set no other age rule. Each lender decides its own age limits and which kinds of income it accepts. Ask before you apply. The guide loan requirements goes through the other points lenders look at.

The credit check with an apprentice’s wage

Before the contract, the lender must check that you can afford the credit (KKG Art. 27a). The Act states the aim: to avoid over-indebtedness (KKG Art. 22). The test is set in the law (KKG Art. 28):

• Your Existenzminimum (minimum subsistence level) stays untouched. You must be able to repay without using the part of your income that can’t be seized in debt collection, worked out with the guidelines of your canton of residence.
• What the lender must always count: the rent you actually owe, your taxes according to the withholding tax table, and the credits already recorded at the IKO, the information office for consumer credit. A leasing contract or a card balance you are paying off counts here, once it is recorded at the IKO.
• The 36-month rule. The lender must assume the credit is repaid within 36 months, even if your contract runs longer.

How the minimum is built. The canton of Zurich’s guidelines show it. The monthly base amount, for food, clothing, personal care and the like, is CHF 1’100 for a single adult who shares a household with other adults, such as parents, and CHF 1’200 for one who lives alone. Your actual rent, health insurance premiums, travel to work and some other costs are added on top (High Court of the Canton of Zurich, guidelines of 16 September 2009). Your canton’s figures may differ.

So the question is what your wage leaves above that minimum, after your taxes and any other credits. If nothing is left, a lender that follows the law cannot lend to you. That check protects you. The guide how much can I borrow walks through it step by step.

If you have no regular income, for example as a student, the test for a loan has little to go on: it asks whether your income can carry the payment (KKG Art. 28). The lender may ask for a salary statement, or for other documents that show your income if you are not employed (KKG Art. 31).

How far an apprentice’s wage goes

Budgetberatung Schweiz, the umbrella organisation of budget advice services, publishes example budgets for apprentices under and over 18 and for students, and guide values for board and lodging at home. They are based on Swiss averages and are meant as a guide, not as your own budget. Budgetberatung Schweiz stresses that the family’s own finances belong in the budget, in particular what the apprentice pays from the wage and what the parents cover. You find its examples and its templates, one of them for apprentices, on its own site.

For a young adult who works and still lives at home, it says that in principle an adult pays their own living costs, board and lodging included. The price is set by those who provide the board and lodging, and both sides look for a fair solution together.

A loan payment has to fit into your own budget, after everything else.

Leasing, cards and paying later

A personal loan is not the only credit that young adults are offered. The Act treats several of them as consumer credit (KKG Art. 1):

• Leasing of goods for your private use, a car for example, when the rates rise if the contract ends early. The leasing company must check that you can pay the rates without touching your Existenzminimum, or that assets you own secure them (KKG Art. 29). It reports the contract to the IKO, and again when three rates are unpaid (KKG Art. 26).
• Credit and customer cards, and overdrafts, with a credit option, meaning you can pay the balance in instalments. Before it sets a limit, the issuer makes a summary check based on what you tell it about your income and assets (KKG Art. 30). Once you use the credit option three times in a row, the amount owed is reported to the IKO, unless it is under CHF 3’000 (KKG Art. 27).
• Paying later. The Act does not apply to credits with no interest and no fees, or to credits you must repay within three months (KKG Art. 7). So some ways of paying later fall outside it, with no credit check and no right to withdraw under the Act.

Budgetberatung Schweiz counts consumer credit, leasing, and purchases on invoice or in instalments among the typical debt traps. It calls «buy now pay later», leasing and consumer credit tempting, and warns that they can weigh on a budget for a long time and quickly become expensive. If you can’t pay, reminder fees, interest or new credits follow. Its advice: make a budget first, and save first, then buy. It also notes that companies, in particular banks and insurers, court young adults intensively, and it advises caution.

Costs that change at 18 and after your training

• Health insurance. Premiums are lower for children and for young adults under 25 (ch.ch). Budgetberatung Schweiz notes that from 1 January after you turn 18, you pay the young adult premium instead of the child premium. A premium reduction from your canton may soften the increase.
• The first tax bill. Young adults usually underestimate the tax bill after their training, Budgetberatung Schweiz writes. In the year you finish, only a few months carry a full wage, so the tax for the following year is much higher.
• Moving out. For a flat, the landlord may ask for a deposit of at most three months’ rent (OR Art. 257e).
• Support from your parents. Parents owe maintenance until you are of age. If you have no appropriate education by then, they keep paying for your keep, as far as can reasonably be expected of them, until that education can normally be completed (ZGB Art. 277).

Budgetberatung Schweiz calls buying without a budget the classic stumbling block of young adult life, such as signing a lease or leasing a car before knowing whether the cost fits. It recommends making or updating a budget before every important decision.

Before you borrow

1. Make a budget with your real figures. Our guide making a budget shows how, and Budgetberatung Schweiz has templates and examples for apprentices and students.
2. Ask whether you need to borrow at all. Saving for a few months costs no interest.
3. Try the payment in the loan calculator. Set the term to 36 months to see what the credit check will assume.
4. Read every contract, including for leasing, cards and paying later. For a consumer credit, you have 14 days to withdraw in writing after you receive your copy of the contract: see the right to withdraw from a loan.
5. Be careful with easy offers. Every lender that lends as a business must check your creditworthiness (KKG Art. 27a). An offer «without a credit check», or one that asks for a fee before payout, is a warning sign. See spotting loan scams.

If money is already tight

If bills are piling up, a loan adds a monthly payment and solves nothing. From its experience, Caritas debt advice says a credit should only be taken out after careful thought, and never to bridge a financial shortfall.

• Budget advice helps you build a budget that works. The members of Budgetberatung Schweiz are independent organisations, so their offers and prices differ.
• Debt advice is for people at risk of debt or already over-indebted. The hotline of the debt advice services, 0800 708 708, is free and answers Monday to Thursday from 10:00 to 13:00. The offices for your region are on schulden.ch.

Our guides debt help in Switzerland and missed a loan payment explain what to do next.

Loans for young adults at Swizeo

In step 4 of the application, you choose «In training» as your type of work if you are an apprentice. We ask because different income types are checked differently. A person on our credit team decides on every application, and a no comes with the reason, as far as the rules allow.

Our terms are the same for every loan we grant:

• An interest rate of 3 % a year, fixed for the whole term and the same for every loan. The effective annual rate is about 3.04 %.
• CHF 1’000 to CHF 1’000’000, over 6 to 84 months.

Next step

Check our requirements, with the reason for each one, on the personal loan page before you apply. If one of them rules you out, better to know now.