Loans from foreign lenders to benefit from currency fluctuations

Is it legally possible to get a loan from a lender outside of Switzerland? I imagine getting a loan in a currency which is rigged to take a nosedive could be a good way take advantage of beneficial exchange rates.

Greetings,

It is legally possible to get a personal loan from a foreign lender. However, because lenders outside of Switzerland do not generally have access to your ZEK and IKO credit records, you will normally have to provide alternative proof of your creditworthiness.

Getting personal loans in foreign currency specifically to benefit from fluctuations in currency exchange rates is risky for these reasons:

1. There is no 100% sure way to predict developments in currency rates. If you end up on the wrong side of a bet, you will still have to repay your loan. If exchange rates develop negatively, you may pay much more for your loan than you anticipated.

2. Foreign lenders are not regulated by Swiss consumer credit laws. You should therefore have a clear understanding of your legal rights in the country in which the lender is domiciled before considering a loan. If issues arise, settling a dispute with a foreign lender may be more difficult.

3. The interest which you pay for a loan adds a significant expense which cuts into possible profits. Unless you earn significant gains on a forex trade, the profits may not outweigh the costs.

Speculating on currency exchange rates using personal loans in foreign currencies is a common practice in trading. It happens every time you place a short order with your online forex broker, for example. However, tying yourself into personal loans - which typically have fairly long loan terms - means taking on a lot of risk. This type of speculation is best left to investors with high risk capacity.

Best regards from Moneyguru

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