Budget and credit calculation: how is solvency calculated?

Whoever intends to apply for a loan must first be aware of the fact that this decision means making a long-term financial commitment. Therefore, it is extremely important that future creditors receive a loan, which corresponds to their income. How can you calculate your budget for a future loan and who to ask for an offer? Find out our expert opinion on this new article


Budget calculation is always required

Budget calculation is always required

Banks in Switzerland are required by law to calculate the applicant’s budget for each loan application (see LCC). This is called the so-called solvency check, the purpose of which is to protect the client from over-indebtedness. However, the law does not explicitly establish which elements are to be included in the calculation of the financial statements. But in principle:

  • The borrower is considered eligible for credit provided that he can repay the loan without getting into debt
  • This part of the budget is calculated differently depending on the canton.
  • A consumer must be able to repay his credit within 36 months, even if the contract may be longer.
  • It should be noted that these are basic requirements. Generally banks can also apply stricter criteria regarding the bugdet.


Budget surplus

Budget surplus

Different elements determine the loan capacity for a customer. The most important key figure is the budget surplus. It is the part of the budget that remains when several expenses are deducted from net income; a consumer must therefore have a positive balance to obtain a loan. The elements of the balance sheet calculation are:

This legislative regulation can be put into practice for individuals but also for married couples with or without children. In addition, banks set an estimate for costs that cannot be documented (e.g. basic expenses). However, all elements of the balance sheet calculation must be listed in the credit agreement.


Revenue, budget and credit: non-binding example

credit loans

The exact budget surplus depends heavily on the individual situation. We have created an example for you that corresponds to an average family * who would like to take out a loan in Switzerland:

Mr and Mrs. Valentino are married and have a son. They live in a rented apartment, he works 80%, she 20%. Overall, they have a net income of USD 8,000 per month. Their budget looks like this:

  • Monthly entry of USD 8,000
  • Monthly expenses of USD 6,500
  • Budget surplus: 1,500 USD

The maximum loan amount is calculated by multiplying the monthly surplus by 36. The Valentino family was thus able to obtain a maximum credit of USD 54,000.


Where can I get the best loan based on my budget?

Where can I get the best loan based on my budget?

As already mentioned, it is very difficult for non-professionals to calculate their credit budget exactly. The latter, in fact, depends on various factors. To get an accurate overview of your income and expenses and the maximum credit limit to be obtained, it is always advisable to contact an expert. Lite Lender has been operating in the credit sector for private individuals since 1999 and can explain all the details on credit limits and budget surpluses thanks to free and non-binding advice. Furthermore, through an independent credit intermediary, you benefit from its know-how in the processing of dossiers and its negotiating skills with banks, which often allow you to get better offers.

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