According to the Consumer Credit Act, the personal loan is defined as an interest-bearing loan. With an amount of 500 to 80,000 dollars, the term is more than three months.
The amount is used only for private purposes and is not covered by collateral. A wide variety of needs can be met with a loan . What exactly is this and what should people know about taking out a loan ?
Consumer loans – An overview of the most important things
This Switzerland loan is simply differentiated into two types. Offline credit that arises when the borrower visits a bank branch and online credit that is processed over the Internet. Banking institutions now offer both options. Recently, individuals have the option of online credit marketplaces to grant each other loans.
The interest and repayment can be calculated together in constant installments using a loan calculator. In addition, the annual percentage rate is calculated and a detailed repayment plan is issued.
When do consumer loans make sense?
This depends on the personal situation. In individual cases, the advantages and disadvantages must be weighed exactly. The funding request must fit into the budget. It is worth investing in a durable product, such as a new kitchen or a car. The term of the loan should always be shorter than the term of the object.
What is it not suitable for?
This loan is not suitable for short-term purchases and consumer goods. In this case, more time is invested in the repayment than the purchased purchase makes a profit. Often, people pay for a wish that was once fulfilled for many years. Under no circumstances should celebrations or weddings be financed through it. In contrast to the repayment period, the joy is only of short duration.
The importance of creditworthiness
Every application is carefully examined. Central to this is an assessment of the creditworthiness or the creditworthiness of the borrower. This involves an assessment of the probability with which the repayment will be made by the applicant. The loan is only granted if the rating is sufficient.
Not only the amount of interest, but also the sum of the loan is important for the creditworthiness. It may well happen that a bank does not approve the entire sum if there are risk factors. This also applies if the budget was allowed for a higher sum.