Loans Between Individuals in Switzerland

Loan for Consumption (art. 312 CO)

The lender transfers ownership of a sum of money; the borrower must return an equal amount of the same kind. A consensual contract: concluded upon agreement on essential elements. No particular form required; oral loans are valid but written form strongly recommended for evidence.

Interest (art. 313-314 CO)

Interest is due only if agreed (art. 313 para. 1 CO). No presumption of interest between individuals (unlike commercial transactions). Compound interest (anatocism) restricted (art. 314 para. 3 CO). Usury is a criminal offence (art. 157 CP): manifestly excessive rates exploiting the borrower's distress. Consumer credit law (CCA) applies to loans over CHF 500 to consumers not secured by real estate (art. 7 CCA), imposing maximum interest rates.

Repayment (art. 318 CO)

If no term is fixed, repayment may be demanded after six weeks' notice from the first demand. Fixed schedules must be respected; default on an instalment may trigger acceleration.

Risks and Precautions

The lender bears the borrower's insolvency risk. Recommended: detailed written contract, signed debt acknowledgment (art. 17 CO), clear repayment terms and interest, assessment of borrower's capacity, guarantees (surety, pledge) for significant amounts.

Prescription

Ten years (art. 127 CO), running from when the claim becomes due.