Info sheet from the Swiss Association. Credit banks and financial institutions (GFIC) on responsible lending and possible risks in the event of fate
What distinguishes responsible for lending?
Personal loans are proven and modern financing instruments. Their allocation in Switzerland is regulated by one of the strictest laws in Europe, the Federal Law on Consumer Credit (GFI). There is a good reason for this rule: its purpose is to protect the borrower against over-indebtedness.
Detailed advice on individual solution options, a serious examination of the loan application – partly based on the information provided by the applicant – and information about potential risks are therefore important concerns for the GFIC member institutes.
The focus is on the portability of the loan for the borrower: the amount of the financing must be within the scope of the individual’s financial options. Therefore, the overall financial situation of the borrower is analyzed and a personal risk profile is drawn up to assess the application.
A portable financing amount is calculated from the individual budget, the repayment of which in monthly installments leaves sufficient financial flexibility so that the borrower can use the financial leeway he has gained as safely as possible.
Blows of fate should not lead to payment difficulties
The borrower must be aware that unforeseen events such as job loss, accident, illness or divorce during an ongoing personal loan can lead to an unfavorable change in his income/expenditure situation.
The borrower can minimize this risk through targeted measures. Recommendations and principles for responsible borrowing can be found on the GFIC homepage.
If such events occur, contact the financial institution is recommended. This may help to find a fair and viable solution in connection with the repayment of the loan, thus counteracting a deterioration in the financial situation of the borrower.
Additional installment insurance
Taking out additional installment insurance – if offered by the financial institution – can also help the borrower to protect himself against payment default due to faultless unemployment, illness or accident.
In any case, the borrower is advised to seek personal advice from his financial institution.