Breaking loan decisions down into steps you can check
These guides break loan decisions down into steps you can check yourself, covering effective rate, creditworthiness, term, household budget and refinancing.
Our guides do not start with the lender but with your budget, what you want to finance and the costs. Only once the key figures are settled does comparing the market make sense.
The key questions
How much do you really need? Which instalment is affordable once you have kept a reserve? Which term keeps the total cost reasonable? What is the alternative without a loan?
And your rights
What a loan costs in the end depends not only on the interest rate but also on four rights that are set out in law and never appear in a rate comparison: withdrawal, early repayment, the capped early repayment compensation and the two-thirds rule for advertising examples.
- Withdrawal: 14 days — when the period starts is the crucial point
- Early repayment possible at any time
- Early repayment compensation capped at 1 per cent
- Advertised example: expected for at least two thirds
In this section
Creditworthiness
Why the advertised rate and your personal offer differ – and how to keep a conditions enquiry and a loan application clearly apart.
Read moreEffective rate
Telling the borrowing rate, the annual percentage rate and the total amount payable apart – and knowing which costs the Price Indication Ordinance includes in the calculation.
Read moreLoan declined
Banks must assess creditworthiness and may not lend if the result is negative. What lies behind a rejection and which steps help now.
Read moreTerm
A short term means a high instalment and little interest, a long term the reverse. How to find the limit without misjudging it.
Read moreYour rights
Withdrawal, early repayment, capped early repayment compensation and the two-thirds rule for advertised rates – with deadlines and section references.
Read moreRepresentative example
The yardstick is not the “from” rate but the representative example: the advertiser must be able to expect at least two thirds of contracts to achieve or beat its APR.
Read morePayment protection insurance
Payment protection insurance for an instalment loan may be taken out no earlier than one week after the loan agreement – otherwise it is void.
Read moreEarly repayment compensation
For an instalment loan, early repayment compensation is capped at 1 per cent, or 0.5 per cent if little of the term remains – and sometimes it does not apply at all.
Read moreEarly repayment
An instalment loan may be paid off in full or in part at any time – and the interest and costs for the remaining term fall away.
Read moreWithdrawal
The withdrawal period for a loan is 14 days, but it only starts once you have the contract document – and, if mandatory information is missing, only once it has been supplied.
Read moreFrequently asked questions
What should I pay most attention to with a loan?
The total amount payable and the instalment in your worst month, in that order. The interest rate is only the route to those figures. A low instalment thanks to a long term feels good but ends up costing considerably more; a short term is only cheaper if you can actually keep it up.
What does the two-thirds rate in loan advertising mean?
The advertised “from” rate describes the best creditworthiness tier and is not tied to any quota. What is binding is something else: the representative example in the small print. Under § 17 (4) of the Price Indication Ordinance (PAngV), the advertiser must choose an APR at which it can expect at least two thirds of the contracts concluded as a result of the advert to be made, or a lower one, so the more realistic figure is the one in small type.
Can I repay an existing loan early?
With a standard instalment loan, yes, at any time, in full or in part, without giving a reason. The interest for the remaining term then falls away proportionally. The bank may charge compensation, but it is capped: no more than one per cent of the amount repaid and never more than the interest you skip.