How Much Loan Can I Afford?

Whether you can afford a loan is something banks determine with a standardized budget calculation. In Switzerland, most of them use the KREMO (CRIF/X-Lease) for this. The basic idea: all fixed living and housing costs are deducted from your eligible net income. What remains is your freely disposable income — the so-called attachable portion.

This attachable portion is decisive: banks grant you only as much loan as you can affordably repay out of this freely disposable part of your income. The calculation follows the circular on calculating the subsistence minimum under debt-enforcement law — the same basis that also applies to a wage garnishment.

Eligible income is your net salary including the 13th monthly salary, bonus, commissions, and allowances. The formula is: freely disposable income = eligible net income − base amount − fixed costs.

The largest deduction item is the monthly base amount. It covers basic living costs such as food, clothing, hygiene, and communication as a lump sum and depends on your household situation and your canton of residence. For single people it is around CHF 1'200 per month; for married couples, registered partnerships, and couples with children it is around CHF 1'700. Per child, depending on age, CHF 400 (up to 12 years) or CHF 600 (over 12 years) is added; individual cantons such as St. Gallen or Schwyz use slightly different amounts.

In addition to the base amount, the bank deducts your personal fixed costs: rental or ownership costs including amortization, health insurance premiums, taxes (with withholding tax according to the cantonal table), ongoing loans and credit cards, leasing contracts, meals away from home, commuting costs (public transport or car), childcare, as well as alimony and similar obligations.

Important for your own planning: the base amount covers essential needs as a lump sum. For a realistic personal budget, you should additionally think about subscriptions, eating out, leisure, and savings contributions — costs that do not appear individually in the bank's calculation but certainly weigh on your everyday life.

Your maximum loan is derived from your freely disposable income. The Consumer Credit Act requires that you be able to repay a loan within 36 months on paper — even if the actual term is longer. Most banks therefore calculate as follows:

Maximum loan = (freely disposable income × 36 months) − interest costs for 36 months

Your freely disposable income must therefore cover the monthly installment. An example of the logic: if you want a term of 24 months, but the corresponding installment exceeds your freely disposable income, you receive the loan over 36 months with a lower installment. You may repay it faster at any time — the result is the same, only the contractual installment remains affordable.

A concrete example: with an eligible net income of around CHF 8'400 (including the 13th monthly salary and allowances) and eligible expenses of around CHF 7'300, a freely disposable income of around CHF 1'100 per month remains.

Over 36 months and after deducting the interest costs, this results in a maximum loan of around CHF 34'000. Depending on the interest rate granted by the bank, the actually possible amount tends to be higher with a more favorable rate. You can best determine the exact figures for your situation with our loan calculator.

The interest rate determines how much of your installment goes toward repayment and how much toward interest. At privatkredit.ch, you receive offers with an effective annual interest rate of 4.9 % to 9.95 % — depending on your creditworthiness and your profile.

For the credit capacity check itself, banks deliberately calculate conservatively with a high interest rate. This protects you: if your actual rate turns out lower, you gain additional financial leeway.

Only take out as much loan as you actually need — even if your maximum loan is higher. Draw up your own budget before applying and make sure to choose a monthly installment that you can also settle without difficulty in the months when many payments often fall due, such as at the end of the year or in January. A longer term lowers the monthly installment but increases the total cost through more interest.

Thanks to the flexibility that you may pay in more at any time, but never less, you can minimize this interest risk with good planning and even make double payments.