Unemployment often upsets the budget balance, especially when a loan is outstanding. Find out how to plan ahead, what to do in the event of the unexpected, and how insurance can protect you against the inability to repay.
How to repay a loan when you are unemployed?
Losing your job often leads to a 20 to 30% drop in income. While this transition is already difficult to live with on a personal level, it can also have a direct impact on your financial situation, especially if you have an outstanding loan.
The monthly payments do not stop.
It is in this kind of situation that we understand the importance of planning for the unexpected.
Fortunately, there are solutions to protect your budget and avoid taking on more debt in the event of unemployment or incapacity to work.
Insurance that protects your credit
When you take out a loan, some institutions offer loss of earnings insurance or unemployment insurance (often called PPI).
This cover covers your monthly payments if you lose your job involuntarily or if you are unable to work.
In general, it can be activated twice during the term of the loan, for a maximum period of 12 months each time. However, it does not cover 24 consecutive months.
This type of insurance is a real safety net to maintain your financial balance without making the situation worse in the event of an unforeseen event.
Is it possible to get a loan while unemployed?
No. In Switzerland, the laws are strict on this subject. It is not possible to take out a personal loan when you are unemployed, even if you receive regular benefits.
Unemployment, like maternity or accident insurance, is considered temporary insurance, not stable income.
Funding agencies rely on a budget based on a salary or a final annuity to assess the ability to repay.
Apart from pensioners (AHV, IV), a loan cannot legally be granted to an unemployed person.
What if you lose your job while the loan is being repaid?
If you are already committed to a credit agreement and you lose your job, the situation can quickly become tricky. Especially if you have not taken out PPI insurance.
In this case, it is crucial to contact your credit institution quickly. It is better to anticipate a late payment than to accumulate unpaid monthly payments.
In some cases, adapted solutions can be proposed: rescheduling, payment pause, temporary adjustment, etc.
It should be noted that banks always calculate a budget with a safety margin to avoid situations of over-indebtedness from the start.
But this is not a substitute for active coverage in the event of loss of income.
How does Milenia support you to protect you?
At Milenia, we offer you optional unemployment and loss of earnings insurance, in collaboration with our partner Helvetia.
This insurance protects you in the event of involuntary unemployment or incapacity for work, by taking care of your monthly loan payments.
You can choose the level of coverage that suits you, between CHF 300 and CHF 1,200 per month, with a maximum of 12 months of compensation.
The insurance does not cover voluntary resignations or dismissals for serious misconduct. A waiting period of 6 months applies after the contract is signed, so it is essential to anticipate.
This option allows you to maintain your financial stability, even in times of transition, and to continue to honour your commitments without additional pressure.
Plan ahead to avoid precariousness
Unemployment or loss of earnings is never foreseen, but its consequences can be mitigated.
Appropriate insurance and quick communication with your lender are the keys to getting through this period more serenely.
At Milenia, we believe that a loan should remain a useful tool, never a source of anxiety. We help you protect yourself, anticipate, and move forward with more security.