Crowdlending has made its place in Switzerland for several years. These participative lending platforms are positioned as alternatives to traditional banking services by allowing individuals to lend money between individuals. And this, without going through the banks. In Switzerland, four platforms offer private loans on the crowdlending model. Comparison between banks and crowdlending for consumer credit.
The crowdlending system, without intermediaries, and without bank taxes, makes it possible to offer very advantageous rates. The Good Lenders Credit platform raises its minimum bar to 3.9% and credit world even drops to 1.5%. A few years ago, these rates would have been absolutely new on the banking market. But today, with the rate cut decided in 2016, the gap between banks and platforms tends to narrow. Banks offer competitive rates of around 4.5%. The Cream Bank even goes up to 3.9%. With regard to maximum rates, the practices are different in the two loan systems. Banks that do consumer credit are required by law on consumer credit to charge rates not exceeding 10%.
For crowdfunding platforms, it’s different. As they are not subject to the law on consumer credit, they can charge higher rates. Share, for example, posts a ceiling rate of 15% on its site. These high rates are beneficial to investors and allow people who would be denied credit at the bank to borrow. Other platforms claim to apply the rates in effect under the CCA even if they are not obliged to do so. Lite Lending presents for example, a ceiling of 9.9% on its website and claims to comply with all the measures in force in the law on consumer credit.
Traditional banks offer amounts of up to USD 250,000 while crowdlending platforms go, for some, much higher in the field of private credit. Lite Lending displays, for example, a ceiling amount of 5,000,000 USD even if it is unlikely that such amount would have been reached one day. Good Lenders Credit goes up to USD 350,000. The possibilities are therefore more numerous on crowdfunding platforms. For repayment terms, however, banks offer more latitude to borrowers with terms up to 120 months, against 84 at most on the side of crowdlending. The monthly payments are potentially lower on the side of the banks thanks to the longer repayment periods.
Speed in the procedure
If the borrower chooses crowdlending to apply for his loan, he can get the desired amount very quickly. After the creditworthiness study of the borrowers, the loan platforms put the request online for a given time. For example, Good Lenders Credit limits the time to two weeks. A considerable advantage for someone who wishes to obtain credit quickly. However, there is no guarantee on obtaining a loan. If there are not enough investors or the requested amount is not reached within this time limit, the credit project falls into the water. For a loan from banks, the response to a request is very fast. They are required to respond within 24 hours as soon as all the mandatory documents have been gathered. However, there are additional waiting times, particularly compared to the revocation period which is 14 days, which slow down the obtaining of the money. For crowdfunding sites that meet this deadline, the duration before receiving the loan becomes similar to that of banks.
What fight against over-indebtedness?
The advantage goes to the banks on this side. Since crowdlending platforms are not subject to the CCA, they are exempt from several federal measures taken to limit over-indebtedness. The drop-in ceiling rates was applied to limit risky situations with excessively high monthly payments. The right of revocation enshrined in the law on consumer credit allows loan applicants to think seriously about the commitment that a loan implies. If a consumer makes a credit request on a crowdfunding platform, according to which platform, he can theoretically not retract while at a bank, he would have 14 days to change his mind.
The brokers of the participating loan platforms are also not required to apply responsible credit, which obliges banks to assess a risk margin in the event of the unexpected. The consumer could then end up with a credit at risk, in the absence of a solid credit study. Some platforms claim to apply the law on consumer credit even if they are not subject to it, but there is no legal guarantee for the consumer who cannot refer to it.
And lending platforms can enforce the law in a variety of ways. Good Lenders Credit for example, says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit. says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit. says it respects the LCC but informs on its site that it applies rates at 15%. People interested in crowdlending loan must imperatively keep in mind that they are not protected by the law on consumer credit for this type of credit.