Cost of living in Switzerland gets high two times and those times are ‘today’ and ‘tomorrow’ stated expert financial analysts. There is high number of borrowers in Switzerland and you should best be prepared before taking loans.
1. No personal Before a Major Loan
You should not take any private loans in Switzerland before another major loan. This means if you want to buy a house or car, then no private loans.
In taking a loan for a house or car, your DSR (Debt Servicing Ratio) is a main factor. DSR means that how much your income’s percentage can go into repaying the car or housing loan, including your other private loans.
So 50% DSR means your private loans and house, car loans repayments can’t be more than your income’s 50%. So more personal loans means you will qualify for smaller car or house loan.
2. A Specific Loan is Cheaper
Banks always like to know where there money is going. For all they know you can be taking money to waste it and afterwards they will struggle to collect the money. So when you take a loan, be as specific as you can like if you want a loan to renovate your house, don’t take a private loan if there is a renovation loan package or if you want a loan for your education take education loan if there is one not a private loan.
Privatkredit in Schweiz have interest 6% to 8% in comparison to specific loans which have interest only 2%.
3. Compare Interest Rates of Banks Extensively
Interest rates of private loans changes very much, so you should compare and take the best at that time. You should look for the bank that’s low on clients as they are desperate to earn so they may give you lower rates.
4. Always Check the Penalties
Almost nobody intends to pay late so they never check late payment penalties. But it’s as important as checking a better offer or the interest rates.
You just pay one late payment and your interest may go from 8% to 9%-10%. So don’t assume anything and check the penalties.
You should check penalties when two banks are giving loan at same rates as penalties can be the deciding factor. So when taking a loan check lower interest rates first and if two or more banks are at a tie, than bank with more relaxed penalties should be taken.
5. Private Loans are not for Leverage, they are for Cash Flow
Private Loans in Switzerland or anywhere in the world are mostly unsecured, and they don’t have any mortgage. So the banks giving private loans have no security so they compensate it by increasing interest rates. So never take a private loan if you are not sure about how will you pay back like then don’t use private loans as capital for an investment which has a high-risk.
You should take private loans if you have cash flow issue not for “Get Rich Quick” schemes.
