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MONEY

Is it easy for a foreign resident get a loan in Switzerland?

When it comes to borrowing money from a Swiss bank, nationality may play a role in some cases, but not in others. This is what you should know about this process.

Published: 3 June 2021 12:31 CEST
Updated: 26 February 2024 11:24 CET
Is it easy for a foreign resident get a loan in Switzerland?
Getting a losn in Switzerland is subject to many conditions. Photo by Claudio Schwarz/Unsplash

Like almost everything in Switzerland, consumer loans are regulated by legislation, in this case the Consumer Credit Act.

It defines a loan as between 550 and 80,000 francs, “offered by commercial providers of financial services”. Lower or higher amounts are not subject to the Consumer Credit Act.

As is the case in many other countries, Swiss banks have strict criteria about who they lend money to. After all, no financial institution wants to deal with people who are not creditworthy.

Whether or not a foreign national can borrow money from a bank depends on their permanent place of residence and permit status.

As a rule, Swiss lenders don’t give loans to non-residents. So if you reside abroad, there is practically no chance that a bank in Switzerland will lend you money.

However, some financial institutions make exceptions for cross-border workers. If you fall under this category, you can use this interactive tool, select “ Permit G” under “Residence Permit” and see what, if any, options, there are.

READ MORE: EXPLAINED: What cross-border workers should know about taxation in Switzerland

If you are a foreign national but have a permanent residence status (Permit C), your chances of getting a loan are practically the same as those of Swiss citizens — provided, of course, that you meet all the requirements set by lenders (see below).

What about other permit holders?

If you have a B Permit, you might be approved for a loan, depending on how long you have had this permit — obviously, the longer the better.

However, “you may be offered a higher interest rate or a limited loan amount. This is because of the statistically higher probability that you will return to your home country. Some lenders require the loan to be repaid by the time the B permit expires”, according to consumer comparison site comparis.ch 

Holders of other, temporary or conditional permits are not accepted.

What conditions — other than residence permit — should you fill to be considered for a loan?

You must be at least 18 years of age, though additional restrictions may apply to applicants under 25 — for instance, a higher interest rate or a limited loan amount. That’s because “lenders are generally more cautious with young applicants as their financial circumstances are usually less settled and the risk of default is deemed to be higher,” Comparis noted.

The same cautious approach applies to pensioners, especially those who have no regular income. The social security payments (AHV/AVS) do not count as income for the purpose of the loan.

There is also other eligibility criteria, based on employment status and salary. People with a regular income have a higher chance of obtaining a loan than those who are self-employed, temporarily employed, work on hourly basis or, logically, unemployed.

Other factors, including your existing debts, are also taken into account in the decision process.

Basically, lenders favour applicants with a stable income and good financial standing, in much the same way as supplemental health insurance carriers prefer young and healthy people.

Keep in mind that if your loan application is rejected, this will be recorded in the database of the  Central Office for Credit Information, making it more difficult, though not impossible, to get a loan in the future.

READ ALSO: Does having a good credit score matter in Switzerland?

The same rules do not apply to American citizens

That’s because Swiss and European banks are subjected to US demands to disclose the assets of Americans overseas in order to prevent tax evasion.

As adherence to these requirements is a major headache for the banks and in some cases also violates their country’s privacy laws, financial institutions prefer not to deal with Americans at all, even those who are permanent residents.

If you are a US citizen who also has Swiss nationality, you may have an easier time of it, but could still face hurdles in obtaining loans and other banking services.

There is no immediate relief in sight, although many organisations representing Americans abroad are lobbying in Washington to change the existing legislation.

READ ALSO: Why are Americans being turned away from Swiss banks?

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COST OF LIVING

‘It is deceit’: Are Swiss retailers shortchanging consumers?

You may or may not have noticed it when you shop, but many products in Swiss supermarkets have got smaller, while their price has remained the same. What is this about?

Published: 17 April 2024 11:55 CEST
‘It is deceit’: Are Swiss retailers shortchanging consumers?

The simple answer to this question is ‘shrinkflation’, which happens when consumers receive less product for the same price.

These products have ‘shrunk’ either in terms of weight or volume, but the price remains the same.

To be fair, this phenomenon is prevalent in many countries, and not just in Switzerland.

Now a new analysis carried out by a Foundation for Consumer Protection (SKS) jointly with public broadcaster SRF, shows how large Swiss distributors like Migros and Coop play their part in this practice.

Many price increases are so subtle that shoppers may not even notice them, according to SKS head Sara Stalder.

“Retailers like to publicise price reductions, but increases are very well concealed,” she said.

“In the criminal sense it is not fraud, but it is certainly deceit.” 

Size matters

So which products have been hit by shrinkflation? These are just some of the study’s findings:

Kiri cream cheese

A pack has lost weight: from 160 to 144 grammes, to be exact, while its price hasn’t budged, which means an 11-percent price increase.

Margarine

The study focused on the Becel brand, the tub of which is now 25 percent smaller.

However, it costs the same as before — which also translates into an 11-percent price hike.

Frozen fish

Although it still costs the same, a pack of Bordelaise-style fish filet from Findus sold at Manor supermarkets now weighs 400 grammes — 20 grammes less than previously.

Tampax tampons

Instead of 22 tampons per pack, there are now only 20 for the same price, which means consumers now have to pay 10 percent more for this product.

But the shrinkflation phenomenon doesn’t only reduce the size of the product sold in supermarkets; it also means manufacturers resort to using cheaper raw materials to cut costs.

One such example are Milka biscuits, which were previously made with sunflower oil, but now the less expensive palm oil is used in the production process.

This kind of ingredient switch “is common,” Stalder said.

Can consumers do anything to counter shrinkflation?

There is at least one instance where consumers were able to force the manufacturer to backtrack.

A few years ago, Coca-Cola bottles were downsized,  from 500 to 450 millilitres, while the price stayed the same.

Faced with a massive criticism, the company backed down and re-introduced the ‘old’ bottles. 

And retailers can have a say too.

For example, Migros and Coop which, like Manor, also sell Bordelaise fish, adjusted its price downwards when the weight dropped.

“This shows that lower prices are possible,” Stalder said. “Big retailers are more powerful than they pretend. They can negotiate better prices.” 

READ ALSO: What will be cheaper and more expensive in Switzerland in 2024?

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