Have you applied for a loan and it has been refused? What are the main reasons for refusing a loan, what to do in case of refusal of the file and are there alternatives? We offer some explanations.
Basic conditions for obtaining a private loan
Whichever organization you choose to contact, the basic conditions, defined under Swiss law (LCC + LCD), are always the same, namely:
- Age: minimum 18 years, the amount borrowed must be repaid in the year of 70 years.
- Budget: the borrower must be able to repay the loan within 3 years (even if he chooses a longer period). The budgetary surplus must therefore be sufficient and its regular income must be sufficient.
- Over-indebtedness: The granting of consumer credit is prohibited if it leads to over-indebtedness. This law (art. 3 LCD) must also appear on any form / website / brochure offering this type of service.
A question of risk
In addition to the “legal” conditions linked to obtaining a consumer loan, the organizations also use the concept of risk. A loan deemed “too risky” (risk of non-repayment) will also be refused. For this reason, other conditions are added such as for example the type of residence permit for foreigners, the duration of employment with the same employer, financial history,…
For more information on credit, see our internet section dedicated to this theme.
The main reasons for refusal
These reasons for refusal are directly linked to the basic conditions (legal or risk). In particular, the main refusals are due:
- The applicant’s background: if he has, for example, open prosecutions, codes with the central credit office (ZEK), or simply too many requests in progress with different companies.
- To his situation: for example permit L, permit G for less than 3 years, if he is unemployed,…
- The applicant’s budget: insufficient income to ensure repayment of the loan within 3 years, existing commitments that are too large (leases, credits in progress, etc.)
- Cases of fraud: falsification of documents, erroneous data, etc.
It can also happen that a refusal is due to an administrative error: file incorrectly entered, additional income not taken into account, incomplete data, etc. For this reason, it is important to contact a specialist such as, for example, Multicredit for s ” to ensure professional handling of the file, but also and above all to benefit from a contact who can intercede on your behalf with the banks in the event of unjustified refusal.
What to do in case of refusal?
Most people who are turned down by a private credit agency tend to try to make another request to another company. If this way of proceeding can sometimes work, it actually tends rather to penalize the future borrower. Too many requests made in a short period of time can in fact lead to negative codes with the credit center and ultimately penalize any future request. In addition, the basic conditions being the same for all banks, it is rare that a file refused with an institution can be accepted elsewhere. Thus, the first reflexes in case of refusal should be:
- Find out about the reason for the refusal.
- If this reason seems based on an error (income badly taken into account, …), ask that the file be reviewed, or at least the situation clarified.
- Otherwise, wait a minimum of 3 months before making another request.
In the event of a credit refusal, there are alternatives. In particular, and depending on the needs and the situation:
- Credit cards: these are linked to more flexible granting conditions. A person who sees their request for a private loan refused will eventually be able to obtain a credit card instead. It should however be borne in mind that a refusal aims above all to protect the consumer against over-indebtedness: this alternative is therefore not always the most judicious.
- Supplementary credit: if you already have a private loan in progress and you need cash, you can, rather than request a new loan from another organization, simply request additional money from the institution with which you have a contract in force. Not only will the procedures be simpler and faster, but the chances of acceptance higher (especially if you have paid your invoices regularly).
- Debt reduction: in the event of a difficult situation, a specialist can help you to improve your situation by taking charge of the management of your receivables. For more information, see our page dedicated to debt reduction.