Choose the right loan term: When the allowance is smaller than the loan instalment

Would you like to take out a loan, but your monthly allowance is less than the planned loan instalment? Then this article is just right for you. We'll show you why the problem is often due to the Runtime and how you can solve it with the right strategy. We also explain how the Household budget according to KKG (Consumer Credit Act) is calculated and how you our budget calculator optimally utilised for this purpose.

Directly to the free budget calculator from credxperts.ch

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Why is the allowance smaller than the loan instalment?

Many prospective borrowers are surprised when they receive a rejection when they apply for a loan - with the note that the loan instalment is too high for their income. The reason for this is usually:

The term is too short and the monthly instalment is therefore too high.

Strict legal requirements apply to consumer credit in Switzerland in accordance with the KKG. One of the most important rules:
The monthly instalment may not exceed your Disposable income (tax-free amount) not exceed.

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What does "tax-free amount" mean?

The tax-free amount is what the law says you are entitled to after deducting all living expenses, taxes, rent and insurance. is left over to live on each month. Only if your loan instalment does not exceed this allowanceyou may be granted a loan.

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How is the budget calculated according to KKG?

The budget calculation in accordance with the Consumer Credit Act is not based on your actual expenditure, but on Packages. The bank or credit broker will make standardised calculations to ensure that you don't fall into a debt trap.

Sample calculation according to KKG (simplified illustration):

Position	Amount (CHF)
Monthly net income	4'500.-
Cost of living (flat rate)	-1'200.-
Rent	-1'300.-
Health insurance premiums	-400.-
Taxes	-300.-
Insurances	-200.-
Available allowance	1'100.-

If you now apply for a loan with a 24-month term and the monthly instalment is CHF 1,200, this loan is not eligible for authorisationas the instalment is above the statutory allowance.

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Solution: Adjust term - reduce instalment

Instead of giving up on your dream loan right away, you should think about it:

Can I extend the term to reduce the monthly instalment?

One example:

Loan amount	Runtime	Monthly instalment	Result
20'000 CHF	24 months	approx. 920 CHF	Rate too high
20'000 CHF	36 months	approx. 640 CHF	Allowance is sufficient
20'000 CHF	48 months	approx. 500 CHF	More room for manoeuvre

The longer the term, the lower the monthly instalment - and the higher the chance that your budget will be sufficient according to the KKG.

Tip: You can make unscheduled repayments at any time, even if you have chosen a longer term.

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How to use the budget calculator from credxperts.ch

To check how high your statutory allowance is, simply use our free budget calculator. You immediately get an overview of how much credit you can afford - and what term is realistic.

Calculate your budget now

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The right runtime is the key

If your loan application has been rejected, it is often not because of your income, but because the loan is too low. Short term with high monthly instalment. Instead of cancelling your loan, you should think about a longer term - and thus reduce your monthly repayments.

The better you know your budget, the easier it is to decide on the right term. And this is exactly where our Budget calculator.

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Other helpful topics:

• Debt rescheduling, it's easy!
• Credit despite debt enforcement - what is possible
• Taking out a loan as a cross-border commuter - is that possible?
• How much credit can I afford?

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