Swiss Loan Survey 2021: What Swiss Borrow Money For

For the Swiss Loan Survey 2021 by moneyland.ch, residents who have borrowed money stated the reasons why they got loans. Of the 1500 survey participants, 841 said that they have gotten a loan at some point. That is 56 percent. More than half of them cited buying a car as their reason for getting a loan. The second most common reason for getting loans is to finance property purchases.

Cars and homes are also the two purchases for which Swiss are ready to take on significant debt. 15 percent have borrowed between 25,000 and 100,000 francs to buy cars. 23 percent have borrowed 100,000 francs or more to finance a home. Borrowing for other purchases is mostly below 25,000 francs. Note that the figures shown here represent the total amounts which a person has borrowed for the listed purposes in their lifetime, and not the sizes of individual loans.

Swiss are most likely to borrow money to finance cars. “Buying a car using a personal loan is often cheaper than leasing,” explains moneyland.ch CEO Benjamin Manz. But borrowing money to buy cars makes little sense from a financial perspective. “Paying in cash is always the cheapest option.”

Financial difficulties

Aside from cars and real estate, furniture, travel, family, and electronics are the most common reasons why Swiss borrow money. Around one-fourth of borrowers have gotten loans because of financial difficulties, to pay taxes, or to pay bills. In 14 percent of cases, money from loans was used to refinance existing loans.

“Getting a loan to refinance another loan is not normally a good move,” says Manz from moneyland.ch. “There is a real danger of the borrower falling into a debt spiral.” The exception: Refinancing can make sense if the new loan is much more affordable than the old one.

Less common reasons for residents of Switzerland getting loans include investing in stocks (11 percent), cryptocurrencies (11 percent), and other securities (10 percent). Currently these practices are most common among adults aged 18 to 25. “Using loans to speculate on markets is very risky,” says Manz.

Reasons why Swiss borrow money

Example: Of the 841 participants who have gotten loans, 55 percent have gotten a loan to finance a car. Participants could name multiple reasons for having gotten loans.

Young adults get loans for electronics and education

From the latest iPhone to television sets, a disproportionately large amount of the young adults who have gotten loans of up to 25,000 francs borrowed the money to buy electronics (44 percent). Financing education is the next most common reason for adults between the ages of 18 and 25 getting loans. 43 percent of adults in this age group have borrowed up to 25,000 francs for education. Residents in this age group are not likely to have borrowed more than 25,000 francs.

Adults in the middle age bracket (26 to 49 years old) and the highest age bracket (50 to 74 years old) are more likely to borrow larger amounts. 35 percent of adults in the oldest age group have borrowed more than 100,000 francs to finance a property purchase, compared to 18 percent of adults in the middle age group.

Residents in both of the older age groups have also borrowed more to buy cars. Around 15 percent of adults in these groups have gotten loans totaling between 25,000 and 100,000 francs, compared to just 9 percent of young adults (18 to 25 years old).

Swiss are most likely to borrow from family

Survey participants also stated how they borrowed money. The answers from 1500 participants are representative of the Swiss population as a whole. Swiss are most likely to borrow money from their family, with 37 percent of participants having gotten a private loan from relatives. Private loans are followed by mortgages (32 percent) and personal loans from lending institutions (28 percent).

More than one-fourth of residents (27 percent) have used credit card loans. “Because Swiss credit card issuers charge up to 12 percent interest per year, carrying credit card balances is a bad idea,” clarifies Manz. A quarter of residents have financed cars using leasing.

How Swiss borrow money

Women are less likely to get loans

Getting loans is more common among men than women. For every kind of loan, women are more likely to have never used that form of financing. The biggest difference is visible in personal loans from banks: Nearly 70 percent of women have never used this kind of loan, compared to 52 percent of men.

Rental deposit guarantees in French-speaking Switzerland

Rental deposit guarantees are exceptionally popular in French-speaking Switzerland. These are not loans in the strict sense of the word, but pledges. One-third of participants in French-speaking Switzerland have used up to 25,000 francs of rental deposit guarantees, compared to 13 percent in German-speaking Switzerland. Use of car leasing, carrying credit card debt, and personal loans from banks is also notably more common in western Switzerland.

Loans for education and travel are exceptionally common in German-speaking Switzerland. Home financing, on the other hand, is somewhat more common in French-speaking Switzerland, with a somewhat higher ratio or residents having borrowed 100,000 francs or more to by property (26 percent).

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