In Switzerland, you can repay any consumer loan early at any time – in full or in part. The lender may not charge you a prepayment penalty for this. This right is enshrined in the Consumer Credit Act (KKG Art. 17) and applies to all loans subject to the KKG between CHF 500 and CHF 80,000.
What you save by repaying early
With an early repayment, all interest for the remaining term is waived. You only pay the outstanding balance plus the interest accrued up to the repayment date.
Example: for a loan of CHF 30,000 at 7.9% interest over a 60-month term, the total interest charge over the full term is around CHF 6,500. If you repay the remaining balance in full after 24 months, you save around CHF 3,000 in interest.
How it works in practice
- Contact your lender and request a final statement for your desired repayment date.
- The lender calculates the outstanding balance including interest up to the cutoff date.
- You transfer the stated amount.
- You receive written confirmation of full repayment.
- The lender reports the end of the contract to the ZEK – with credit code 2 (regular repayment) or code 1 (balance offset by a new loan, in the case of debt restructuring).
Full or partial?
Both are allowed. With a partial repayment you have two options (depending on the bank): the monthly installment stays the same and the term shortens, or the term stays the same and the monthly installment decreases. Clarify with your lender beforehand which variant is offered.
When early repayment is especially worthwhile
- You have received money (inheritance, bonus, back pay) and want to save on interest.
- You are planning a debt restructuring: paying off your existing loan and replacing it with a new one at a lower interest rate. Since no prepayment penalty applies, you benefit immediately from the lower rate.
- Your existing loan is weighing down your budget for a new loan application: the bank spreads the outstanding balance over 36 months. Once it's paid off, this burden disappears.