The all-important question before you even consider applying for a loan is: “How much credit can I actually afford?” This is the most important step for secure and stress-free financing.
As a quick guide, a simple rule of thumb has proven itself in practice: Your total monthly installments should not exceed 35% of your net income. This figure is a great starting point to get an initial feel for your financial possibilities.
A realistic credit limit as a foundation for your finances
Many people tend to underestimate their running costs and overestimate their financial flexibility. This is human, but can quickly lead to serious problems. An honest and really thorough calculation in advance not only protects you from possible over-indebtedness, but also significantly improves your chances of being approved for a loan. Banks in Switzerland check very carefully what financial burden you can really bear at the end of the day.
Lenders look at three key points in particular:
- Your stable net income: This is the irrefutable basis for every calculation.
- Your fixed and variable expenses: Everything counts here – from your rent and car to your leisure budget.
- The resulting free margin: This is the amount that is actually left in your account each month after deducting all costs.
Why an honest self-assessment is so important
It is of course tempting to be a little too optimistic about your financial situation in order to perhaps get a higher loan amount. But this is a fallacy. A loan installment that is set too high severely restricts your financial leeway and can lead to real bottlenecks in the event of unforeseen events – just think of an expensive car repair or sudden job insecurity.
A realistically set credit limit is not an obstacle, but your own personal safety net. It ensures that you can easily meet your financial obligations without having to sacrifice quality of life.
Incidentally, the demand for financing continues unabated. According to a recent survey, around 10 million people in Germany are planning to take out a loan in the next one to two years – a significant increase. At the same time, banks are becoming more cautious when granting loans and on average only approve loans up to a total of 30-40% of net income.
This trend underlines the importance of proper preparation. Defining a realistic credit limit that really takes all aspects into account is the be-all and end-all. This applies all the more to large projects such as real estate financing without equity.
To better understand the key factors that influence your loan amount, take a look at the following table.
Overview of the key credit factors
This table summarizes the most important elements that determine your maximum loan amount and briefly explains their influence.
| Factor | Factor Description | Importance for the bank |
|---|---|---|
| Net income | Your regular, verifiable income after deduction of taxes and social security contributions. | Very high – This is the basis for calculating your financial capacity. |
| Fixed costs | Regular, unavoidable expenses such as rent, insurance and existing loan installments. | Very high – These directly reduce the amount you have available for a new installment. |
| Variable costs | Living costs for food, leisure, clothing, etc. Banks often set lump sums for this. | Means – Influences the assessment of your general standard of living and financial leeway. |
| Creditworthiness (Schufa score) | Your payment history and creditworthiness, which is shown in a score. | Very high – A good score is a prerequisite for a loan approval and influences the interest rate. |
A well-founded assessment of these factors not only gives you security, but also strengthens your negotiating position with the bank.
An online loan calculator is a great tool for getting an initial idea. As you can see above, you can quickly determine an approximate monthly installment with just a few entries such as the loan amount, term and an assumed interest rate. Such calculators help you to develop a feel for the figures and run through various scenarios long before you submit an official application. In order to find your way through the often confusing credit jungle, it can also be helpful to find out how to navigate the German credit market.
Understanding your financial reality – the cash check with the budget statement
To be honest, before we even talk about loan amounts and installments, we need to know where you stand financially. A clean, honest budget calculation is the be-all and end-all. Without it, the question “How much credit can I afford?” is a pure game of chance with potentially unpleasant consequences. Only this cash check provides the necessary clarity and gives you control.
First the good news: What’s coming in?
The first part is usually the more pleasant and can be done quickly. List everything that flows into your account each month. Don’t just limit yourself to your salary.
- Your net salary: What is left over after deducting all taxes and social security contributions.
- Additional income: Do you have a second job, rental income or income from self-employment? They belong here.
- Other regular payments: These include, for example, child benefit or alimony.
The sum of these items is your financial starting point.
Now it’s getting exciting: Where does your money go?
Now comes the part that often causes surprises – the detailed list of your expenses. Be ruthlessly honest with yourself here, because every little thing you leave out will distort the result. It is best to sort your costs into two categories.
The fixed costs are the predictable, usually monthly recurring amounts. They are the basic structure of your expenses.
- Rent or the installment for your property
- Health insurance premiums and other insurances
- Ongoing subscriptions (from streaming services to gyms)
- Costs for cell phone, Internet and TV
- Existing installments for other loans or leasing contracts
The variable costs are the ones that look different every month and where there is often the most potential for savings. But this is also where it is easiest to lose track. Typical examples are expenses for:
- Food and household
- Leisure time (movies, restaurants, excursions)
- Clothing and shopping
- Transportation (gasoline, public transport tickets)
- Hobbies
A pro tip: Don’t forget the irregular but fixed expenses! The annual car insurance, tax payments or heating maintenance can really mess up a monthly budget. It’s best to divide these annual amounts by twelve and mentally set this sum aside each month.
What remains at the end of the day is the decisive figure: your real monthly surplus. This is the amount that is actually freely available after deducting all costs. And only this surplus is the basis for your future loan installment.
If manual listing is too tedious for you, you can make the work much easier. A digital tool such as the credXperts budget calculator guides you through the process step by step. This ensures that you don’t forget any important items and provides you with a reliable basis for your further credit planning at the touch of a button.
How to find the right monthly installment – with the necessary safety buffer
Okay, you’ve listed your income and expenses neatly and now you know what’s left at the end of the month. That’s half the battle! But now comes the crucial point that will determine whether your loan is a safe bet or a financial risk. The question is not only: “How much credit can I afford?”, but above all: “What installment can I really afford?”
It is incredibly tempting to put the entire monthly surplus directly into the loan installment. After all, you want to get rid of the debt as quickly as possible or borrow a larger sum. But believe me, that’s playing with fire. Life doesn’t stick to budgets – an unexpected car repair, a hefty utility bill or sudden short-time work can throw any well-thought-out plan out of kilter.
Why a safety buffer is essential
A financial buffer is not a luxury, but an absolute necessity. It is your airbag for unforeseen expenses and prevents you from immediately running into difficulties. A simple rule of thumb has proven itself in practice: Allocate a maximum of 50% to 70% of your monthly surplus to the loan installment.
If, for example, you have €500 a month left after deducting all fixed costs and variable expenses, your maximum loan installment should be between €250 and €350. The remaining €150 to €250 is your buffer for emergencies. This cushion gives you the breathing space you need and ensures that you don’t immediately put your loan at risk even in the event of unpleasant surprises.
Never plan your loan installment down to the last cent. A buffer of at least 30% of your surplus protects you from financial bottlenecks and ensures that you can sleep soundly even in difficult times.
The interplay of rate, term and total costs
The amount of your monthly installment is inextricably linked to the term of the loan. This is about finding the best compromise for your personal situation.
Let’s take a concrete example: You need a loan of €15,000 and receive an offer with an APR of 5.9%.
-
Scenario 1: Rapid repayment
- Term: 48 months (4 years)
- Monthly installment: approx. 352 €
- Total interest costs: approx. 1.896 €
-
Scenario 2: The relaxed variant
- Term: 72 months (6 years)
- Monthly installment: approx. 248 €
- Total interest costs: approx. 2.856 €
The trade-off is obvious: a longer term massively reduces the monthly burden – in our case by over €100. This creates significantly more financial leeway in everyday life. The catch? You pay almost €1,000 more in interest over the entire term.
The right term is therefore always a very personal decision. If your budget is rather tight, a longer term may be the wiser choice. If, on the other hand, you have more breathing space, you can save money with a shorter term. If you’re unsure how to find the best balance, take a look at our guide to the right term to avoid rejection.
An online loan calculator is your best friend here. Play through various scenarios. Change the term or the interest rate and see how this directly affects your installment and the total costs. This will give you a real feel for the figures and in the end you will find exactly the rate that you can afford with a good and secure feeling.
How to calculate your maximum loan amount in concrete terms
Now it’s time to get down to business. You have determined your monthly affordable rate and planned a buffer for unforeseen expenses. That’s half the battle and the most important step in finding out: How much credit can I really afford?
Now we bring your personal financial situation together with the conditions on the credit market to determine the maximum possible loan amount.
The good news first: the logic behind it is actually quite simple and exactly the same as that used by banks. You only need three central parameters:
- Your calculated monthly payment: The amount you can safely afford each month.
- The APR: The actual annual cost of the loan.
- The desired term: The period over which you would like to repay the loan.
These three factors always interact. If one changes, it has a direct impact on the others. An online loan calculator does the math for you, but to get a feel for what it looks like in practice, let’s run through the whole thing with two typical examples.
From theory to practice: two everyday examples
Let’s assume that your budget check shows that you have CHF 450 available each month for a loan installment.
Scenario 1: A car loan
You are dreaming of a new car that costs around CHF 25,000. You are planning a term of 60 months (i.e. 5 years) and the APR offered is 5.9%. A loan calculator would give you a monthly installment of around CHF 482. This is just above your budget.
Now you have two options: you could extend the term to 72 months. Then the rate drops to around CHF 413 – and it’s perfect. Alternatively, you could try to negotiate a better interest rate.
Scenario 2: Debt restructuring
You would like to pay off an existing, expensive loan of CHF 15,000. Your aim is to keep the monthly charge as low as possible and you decide on a term of 84 months (7 years). With a good new interest rate of 4.5%, this results in an installment of only CHF 201. This immediately gives you significantly more financial leeway in your everyday life.
The path from your monthly surplus to the final loan installment can also be easily visualized.
The chart clearly shows that the sustainable rate is never the entire surplus, but what remains after deducting a solid safety buffer.
Your maximum loan amount is not a figure set in stone. It is the flexible result of the interplay between the installment, interest rate and term. Use these three levers consciously to adapt the financing to your life – not the other way around.
Especially when it comes to fulfilling the dream of owning your own home, this knowledge is worth its weight in gold. If you know your exact financial scope, you can make much more informed decisions when purchasing private real estate. With a clear idea of your maximum loan amount, you will appear completely different during viewings and negotiations – namely confident and well prepared.
The term as a decisive factor
To illustrate how strongly the term influences the possible loan amount, let’s take a look at a sample calculation. Let’s assume your affordable monthly installment is CHF 500 and the interest rate is 5.9%.
Sample calculation of the maximum loan amount
| Term (months) | Monthly installment | Effective annual interest rate | Maximum loan amount |
|---|---|---|---|
| 36 | 500 CHF | 5.9% | approx. 16,590 CHF |
| 60 | 500 CHF | 5.9% | approx. 25,800 CHF |
| 84 | 500 CHF | 5.9% | approx. 33,750 CHF |
| 120 | 500 CHF | 5.9% | approx. 44,570 CHF |
As you can clearly see, a longer term enables a considerably higher loan amount with the same monthly charge. However, bear in mind that you will also pay more interest overall over the longer period.
The Swiss loan calculator from credXperts is a powerful tool that takes these planning games off your hands. You can run through various scenarios and immediately see how every small change affects your maximum loan amount.
Avoid typical mistakes and make clever use of opportunities
The decision to take out a loan is more than just a simple calculation. It is a financial decision that should be well thought out. From our years of experience, we know the pitfalls that are often overlooked, but also the clever tricks you can use to secure the best conditions.
A classic mistake that happens again and again: Applying for a loan without having checked your credit rating first. Many people don’t even know what’s in their file. An old, forgotten negative entry can then quickly lead to a rejection. My advice: Always request a free credit report in advance to be on the safe side.
Clever comparison and advice
Perhaps the most expensive mistake is to blindly accept the first offer from your own bank. The differences in interest rates on the market are enormous and can quickly amount to several thousand euros over the entire term. A thorough comparison is therefore not a “nice to have”, but an absolute must if you don’t want to pay unnecessarily.
This is precisely where the value of professional credit advice becomes apparent. A good advisor not only knows the market, but also the internal rules and acceptance criteria of the various banks. They can prepare your application in such a way that your chances of approval increase significantly. You can read more about this in our article on the advantages of independent credit advice.
The often underestimated power of debt restructuring
Many people overlook one of the most effective strategies for optimizing their finances: debt restructuring. Do you have several small installment payments, an old, expensive loan or a constantly exhausted overdraft facility? All of these can be bundled into a single, new loan – often at a noticeably better interest rate.
The result is not only a lower total monthly charge, but also a much clearer overview. Instead of many small direct debits, you only have one payment to one contact person. This simply simplifies everything.
Debt restructuring is not a sign of weakness, but a smart, strategic move. It immediately gives you more financial leeway.
Banks are now looking more closely than ever before. In view of the increased risks, the guidelines have been tightened. Particularly when rescheduling or topping up a loan, banks are looking closely to ensure that the new total burden does not exceed a certain limit, which is often less than 40% of disposable income. A professional broker can play a decisive role in overcoming these hurdles. Find out more about current developments in lending on handelsblatt.com.
The Swiss Consumer Credit Act (KKG) offers you important protection in this regard. It is intended to ensure that banks grant loans responsibly and that you as a borrower do not fall into over-indebtedness. The careful creditworthiness check required by law is therefore not a form of harassment, but serves to protect you. It ensures that the answer to the question “How much credit can I afford?” is a realistic and viable one.
Your questions about credit calculation – our answers from the field
Before you apply for a loan, you will naturally have questions. This is completely normal and even important. From countless conversations with customers, we know exactly where uncertainties often arise. That is why we have collected the most frequently asked questions for you here and answered them directly.
What does my ZEK entry say about my credit options?
Honestly? The ZEK entry is the be-all and end-all for Swiss banks. It is effectively your financial CV and shows how reliable you have been with loans and payments in the past. A negative entry – be it a late payment or even debt collection – is an immediate red flag for lenders.
The consequences can be severe:
- In the worst case, your application will be rejected immediately.
- You do get a loan, but at a noticeably higher interest rate. The bank simply pays for the risk.
- The bank will only approve a much smaller amount than you actually need.
A clean ZEK entry is therefore worth its weight in gold. It opens the door to a commitment, better conditions and a higher credit limit. A little tip from experience: Always request a statement before submitting an application to make sure that everything is correct.
Can I get a loan during the trial period?
This is a tricky point. Getting a loan during the probationary period is difficult, but not completely impossible. For most banks, this phase is simply too uncertain. They want to see the certainty of a permanent, non-terminated employment relationship to ensure that the installments can also be paid in the long term.
A few providers are more flexible, but usually have stricter requirements. This may mean that the interest rates are higher or that you need a second applicant with a secure income. Openness towards the bank is the most important thing here.
How does a second applicant affect the loan amount?
Enormous! Applying for a loan as a couple, for example with your partner, can significantly expand your options. The logic behind this is simple: the bank looks at the total income of the household.
When two incomes come together, the amount left over at the end of the month increases. This strengthens your financial resilience immensely and reduces the risk for the bank. The result is often not only a higher loan amount, but also a better interest rate.
The prerequisite is, of course, that both people have a good credit rating and meet the basic criteria.
Nominal interest rate vs. effective annual interest rate – what is really important?
This distinction is absolutely crucial, otherwise you are comparing apples with oranges. Don’t be blinded by the often lower nominal interest rate. It only quantifies the pure cost of the money borrowed, but ignores all the additional costs.
The truth lies in the APR. This figure includes all costs and fees associated with the loan – from processing fees to other charges. It is required by law in order to create transparency. So always look at this figure for every offer, because only it tells you what the loan will really cost you in the end.
Do you want to know what’s in it for you now? The experienced experts at credXperts AG will help you to quickly and easily determine your financial reach and find the right offers. Start your free and non-binding loan application directly with credXperts and you will receive an offer tailored precisely to your situation in just a few minutes.
