Are you planning to finance a project or to compensate for a lack of liquidity with a personal loan? What are the real costs, how can you reduce them and what should you watch out for? We present some simulation examples as well as the link to an online calculator.

How much does a loan cost?

The cost of a loan is basically easy to determine. As soon as the money has been allocated, the borrower must pay a fixed monthly installment, which includes both the repayment of the loan (amortization) and the interest costs. The interest payable depends on the following:

  • Borrowed sum: Higher sums mean proportionally higher interest.
  • Interest rate applied: this is usually between 5.9% and 9.9%. One has to bear in mind that the vast majority of private loans in Switzerland are granted at an interest rate between 8.9% and 9.9%.
  • From the repayment period: A longer period also means higher costs.

To do a credit simulation, it is enough to know these three elements: sum , duration and interest rate . There are numerous loan calculators on websites, which offers a fast and reliable tool for credit simulation.

Apart from the interest, there are actually no other costs. No dossier fees are charged for processing the request , regardless of whether you contact a bank directly or a broker (an agency or a broker). Certain cost items can also be added, but these are small and quite rare (closing costs in the event of early repayment, reminder fees, etc.).

Some examples

A loan of USD 10,000 over 24 months with an interest rate of 8.9% means a monthly installment of USD 454 and a total interest of USD 915.

  • The same loan with an interest rate of 9.9% causes the monthly installment to rise to USD 459 and the total interest to USD 1,016.
  • A longer term has a major impact on costs. The same loan over 48 months has a lower monthly rate of USD 246, but total interest costs of USD 1,843.

A loan of USD 50,000 over 48 months with an interest rate of 7.9% means
a monthly rate of USD 1’211 and total interest costs of USD 8’172.

  • The same loan with an interest rate of 9.9% has a monthly installment of USD 1,255 and a total interest paid of USD 10,269.
  • Raising the term to 72 months for the same loan affects the cost much more. The monthly rate drops to USD 867, but the total interest paid increases to USD 12,467.

Watch out for the duration!

So you have to be especially careful with the term of the loan. A longer repayment period reduces the monthly installments, but it also means a higher total interest. Many borrowers focus primarily on the interest rate and forget to check the term offered by the bank, which has a major impact on the loan. So that you can find out more, we recommend that you do a credit simulation or even contact a credit advisor who can find the best offer for you free of charge at the banks and improve your conditions.