Personal loans, consumer credit and small loans: what is the difference?
Understand Swiss loan terminology, when the Consumer Credit Act applies and which contractual details matter more than a product name.
Updated on · Budgetcredit
Three terms do not necessarily mean three different products
In everyday Swiss usage, personal loan and small loan often describe lending to an individual. Consumer credit is also a legally defined term. A provider choosing a different product name does not automatically change its legal classification. Relevant factors include the purpose, contract structure, amount and repayment period.
Someone financing a car for private journeys, for example, may encounter offers using all three labels. Do not compare headings alone. The actual amount paid out, interest, total payments and terms matter. Two differently named offers may be financially very similar, while two “personal loans” may differ considerably.
What do the individual terms mean?
A personal loan generally targets someone wanting to finance a private need. The money is often paid out and subsequently repaid in agreed instalments. The term alone says nothing about collateral, flexibility or whether the Consumer Credit Act applies. Advertised freedom of use does not replace a full explanation of the actual purpose in the application either.
“Small loan” primarily describes the marketing of a manageable loan amount. It implies neither a simplified statutory assessment nor an automatically low interest rate. An apparently small amount can overwhelm a tight household budget. The relative burden on your income matters more than the product label.
The Consumer Credit Act, known as the KKG, covers certain financing arrangements for consumers for purposes outside their professional or commercial activities. Besides cash loans, these may include certain leasing agreements and cards with an instalment option. Different rules apply in part to these types of agreement. Saying “consumer credit always means a bank loan paid out in cash” would therefore be too narrow.
When does the Consumer Credit Act apply?
For a typical interest-bearing, unsecured personal loan, Art. 7 KKG is particularly relevant: agreements below 500 francs or above 80'000 francs are excluded from the Act. Loans repayable within no more than three months are also among the exclusions. Other statutory exceptions exist. Amount thresholds alone therefore do not establish the full scope of application.
Consumer loans arranged in a coordinated manner for the same person are added together for the statutory amount threshold. Artificial splitting is therefore not a reliable way around legal rules. Conversely, an offer above 80'000 francs is not prohibited solely because of its amount. This exception places it outside the KKG; general contract law and the provider’s lending policy remain relevant.
Nor does the word “personal” establish whether a loan comes from a bank, a brokerage platform or someone you know. Lending between acquaintances may be subject to different requirements from commercial lending. Clarify the legal classification before assuming that protections from a standard bank loan also apply.
These details allow a meaningful comparison
- How much money will you receive, and will any part be used directly for another purpose?
- What effective annual interest rate applies to your individual offer?
- How many instalments are due and what is the total repayment?
- Which additional costs or insurance products are included?
- What rights apply to withdrawal and early repayment?
The effective annual interest rate is more informative than an isolated advertised rate. Nevertheless, check the contract for cost components and optional additional products. Compare the same amount and duration. An offer with a lower monthly instalment may look cheaper simply because repayment lasts longer. Also read our guide to comparing loans.
Why even a small loan must fit your budget
For cash loans within the KKG’s scope, affordability is assessed on the assumption of repayment within 36 months, even when a longer contractual term is planned. A low monthly amount in an offer therefore does not prove that financing can be approved. The assessment protects the income needed for essential living costs.
Also plan for your actual expenses and a reserve. If a purchase can be postponed, compare borrowing with saving up or choosing a smaller project. A loan makes an expense possible sooner, but not free. A budget calculation helps turn a product name into a concrete decision about needs and commitments.
Frequently asked questions
Is a small loan always cheaper?
No. The amount, term, creditworthiness and conditions determine costs. The name promises no particular price.
Does the KKG apply to every personal loan?
No. Purpose, contract type and statutory exceptions must be checked. Amount thresholds alone, in particular, do not provide a complete classification.
Is a loan above 80’000 francs prohibited?
No. The amount exception places it outside the KKG. Whether a provider grants it depends on its offer and assessment.
Sources and information date
Information as of 13 October 2026. The applicable rules, individual assessment and contract documents are decisive.
Credit must not be granted if it would lead to over-indebtedness. A budget calculation provides a non-binding indication, not a loan offer.
