The Consequences of Late Payments: What You Need to Know

Late Payments: Understand the Consequences and Act in Time

Whether it's a consumer credit or a lease, a simple late payment can have lasting repercussions on your financial situation. It's best to know the effects so you can anticipate, avoid mistakes, and protect your credit file.

1. Payment After Reminder: Risks

A simple late payment may seem trivial but can have significant repercussions on your credit record. After the first reminder, a ZEK code 03 is recorded under your name, indicating a serious fault that will remain in your history for five years. This could jeopardize any future loan or leasing application.

Late Payment Penalties: Depending on the bank, fees can range from 15 CHF to 100 CHF, according to the general terms and conditions.

2. Reduction of Monthly Payments

If you can no longer manage your monthly payment, you can request a reduction. However, this results in the registration of a ZEK code 04, which is even more serious than code 03. This code will also remain on record for five years.

3. Delays Exceeding 10% of the Debt

In the event of significant delays exceeding 10% of the total debt amount, the bank may demand immediate repayment of the entire remaining balance, including interest. This can lead to legal action, and if you are in a partnership, your solvent partner may also be required to help settle the debt.

Being late on credit payments can have lasting effects on your credit score, impacting not only your current and future loans but also other areas such as leasing and credit cards, where your score plays a key role. This is why careful planning from the start is crucial.

Choosing the Right Loan Term

A crucial decision when applying for credit is selecting an appropriate duration. While a shorter term can reduce interest costs, opting for a longer term that better fits your budget is often wiser. This approach provides you with the flexibility to handle unforeseen events over the years without straining your finances. Remember that under the Federal Consumer Credit Act, you can repay more than the minimum at any time, offering additional flexibility if your financial situation improves.

To learn more, consult our articles on eligibility criteria, budget calculations, and common reasons for loan refusals. These resources highlight the importance of maintaining a good credit profile. Late payments can harm your credit rating and create obstacles not only for future loans but also for other services where your creditworthiness is assessed.

Our Commitment to Helping You Make the Right Choice

Choosing the right loan term and planning for the long term can be complex. Our team is here to help you find a solution that truly fits your situation. We guide you through the process and assist you in making sound financial decisions that align with your needs and long-term goals.

Calculation example

Loan of CHF 20'000. An effective annual interest rate between 4.9% and 10.95% and a term of 48 months generate total interest between CHF 2'018.10 and CHF 4'549.60. Term: 6-120 months; Maximum annual interest rate (including all credit charges) 10.95%. The granting of a loan is prohibited if it leads to the over-indebtedness of the consumer.(Art. 3 LCD)