Car loan in Switzerland

A car loan is a loan intended to finance a vehicle. In Switzerland, it is typically a standard personal or consumer loan in the vast majority of cases.

For you, this means that, despite frequent advertising as a «car loan», such loans are generally not linked to the vehicle – a key distinction from leasing.

When is a car loan a «real» car loan?

The only genuine car loans currently available in Switzerland are offered by Cembra Money Bank and BCGE (Geneva).

These loans are arranged through a specialist dealer – typically a garage or car dealership.

Being linked to the vehicle, this type of car loan renders it attachable, affecting the borrower’s requirements and the risk assessment.

In this respect, a «real» car loan bears greater similarity to leasing than to a standard loan, as attachability imposes specific restrictions.

Specifically:

• As with leasing, the code 178 «change of holder prohibited» is registered, preventing you from selling the vehicle freely at any time.
• For a value exceeding CHF 25'000, a fee-based retention of title is recorded.

What are the advantages of car loans?

A car loan of this kind can offer certain advantages. It is arranged on-site during the vehicle purchase. The inclusion of an attachable asset (the vehicle) as an integral part of the contract positively influences the risk assessment of your profile as a borrower. Specifically, the evaluation of your eligibility may be less stringent in some aspects.

What are the disadvantages of a real car loan?

In contrast, you face restrictions on the vehicle’s use. If, based on your financial and personal circumstances, you could equally opt for a «standard» loan, it’s worth exploring this alternative – by purchasing the vehicle with such a loan, without it being tied to the contract, you retain greater flexibility, particularly if you later wish to sell it.

What's the difference from Leasing?

With a car loan, you own the vehicle, whereas with leasing, the vehicle is provided solely for your use.

This eliminates obligations related to servicing, garage choice, and mileage limits.

Should you wish to retain a leased vehicle after the contract expires, your right to purchase it is assured only if an option to buy has been agreed upon. Additionally, you must cover the residual value costs to finalise the acquisition.

Unlike a car loan, you cannot terminate a leasing contract early at any point without incurring costs due to premature repayment.

Who provides loans?

When seeking a loan from a commercial lender, three main categories of providers are relevant:

• Banks

Banks account for the majority of loans in Switzerland. Some, like Migros Bank, offer loans alongside other financial services, often through dedicated divisions such as BANK-now or CREDIT-now (e.g., UBS, formerly Crédit Suisse). Others, like Cembra Money Bank or bob finance, focus specifically on consumer loans.

• Peer-to-Peer (P2P) Lending Platforms

Crowdlending, a subset of crowdfunding, involves platforms that connect borrowers with investors. These investors, whether individuals or institutions, fund the loans. Since 2019, P2P lending platforms in Switzerland have been subject to the Consumer Credit Act if the loans meet the relevant criteria.

• Loan brokers

Loan brokers, whether individuals or companies, facilitate loans on a professional basis. They typically require authorisation in their canton of operation and assist clients by offering advice and handling administrative tasks related to the loan agreement.

Not all brokers work with the same lenders or offer identical options. However, a good broker understands the basic requirements for various situations and can improve your chances of securing a loan. The more lenders a broker works with, the better they can explore and present options tailored to your needs.

What are the interest rates on the car loan?

For instance, the «Financing Plus» product from Cembra Money Bank, tailored to car financing, is offered at an interest rate ranging from 7.95% to 9.95%.

As with other loans, the effective annual percentage rate (APR) is revealed only upon receiving your personalised offer. For each offer, the lender conducts a thorough review of your financial circumstances, creditworthiness, and their own risk criteria, determining whether you qualify for a loan and under what terms.

Consequently, it’s impossible to ascertain without a bespoke assessment whether this offer is more cost-effective than a standard loan in your particular case.

What are the requirements for a loan in Switzerland?

To apply for a loan, you must meet several conditions:

• Age: You must be at least 18 years old.
• Between the ages of 18 and 25, you may be eligible for a loan, though some lenders impose restrictions, particularly on the maximum amoun
• Beyond a certain age, securing a loan becomes more challenging. This varies by lender – for instance, approval may require homeownership, and repayment terms are often constrained, such as requiring full repayment, including interest, before a specified age.
• Employment or income: You must provide documentation, such as payslips, to verify this.
• Residence permit: No restrictions apply to Swiss citizens, those from the Principality of Liechtenstein, or, typically, C permit holders. However, significant limitations may apply to other permits (B, G, L), and certain nationalities with a C permit may also face restrictions.
• Creditworthiness: A credit check is essential in all cases, assessing your credit score, debt enforcement records, and payment history, among other factors.
• For consumer loans, a credit capacity check is legally mandated.

Further details on requirements and restrictions are available here:

How does the process work?

Check your options with a non-binding enquiry

• You send us your non-binding enquiry.
• We review your initial situation and complete your profile, including the necessary documents.
• To estimate your approximate loan capacity, we assess your income and expenditure. This budget calculation complies with the Federal Law on Consumer Credit (FLCC).
• We determine which bank or banks might offer you a loan and at what interest rate.
• We present this initial assessment of your options to you clearly and transparently.

Submit an application to the bank or lender

• After discussing with you and receiving your approval, we submit your application to a suitable lender.
• The lender performs a credit check, including reviews by ZEK and IKO.
• Once we receive feedback on your application, we’ll go over it with you.
• If you’re happy with the offer, we’ll arrange the contract for you. After you sign and return it, the 14-day cooling-off period (right of withdrawal) for consumer loans begins.
• Loans not covered by the FLCC are disbursed without a waiting period.

Disbursement and repayment

• The loan amount is paid into your bank account.
• You arrange payment of your agreed monthly instalments via direct debit or individual monthly payments.
• Making payments on time is crucial to build a positive loan repayment history.
• Repay more when your budget allows—this reduces the loan term and lowers interest costs.