Debt restructuring in Stuttgart: How to reduce your interest burden by up to 50 per cent
14.07.2025
6
Minutes
Katrin Straub
Managing Director at nextsure
Are you paying too much interest on old loans? Many consumers in Stuttgart lose hundreds of euros every year because of outdated contracts. Discover how you can significantly reduce your financial burden through targeted refinancing.
The topic in brief and concise terms
Refinancing consolidates expensive existing loans and can reduce interest costs by up to 50 per cent thanks to currently lower market interest rates.
The prepayment penalty is legally capped at a maximum of one per cent of the outstanding balance, which often makes refinancing worthwhile despite the fees.
By combining several loans into a single loan, you gain a better overview and often also improve your SCHUFA score.
The Potential of the Interest Rate Differential: A Calculation Example
Old loan agreements often have interest rates of five per cent or more. With current offers, interest rates of below three per cent are often possible. This difference of just two percentage points can mean savings of over €1,000 over a five-year term on a loan amount of €20,000. Many underestimate how even small interest adjustments affect the total cost. You often achieve the greatest savings when paying off an expensive overdraft facility, which is not uncommonly charged at over ten per cent interest. Debt consolidation bundles such liabilities into a single, manageable instalment. This allows you not only to save on interest, but also to pay off an expensive overdraft facility. This consolidation significantly improves the overview of your finances.
The strategic advantages of refinancing
A refinancing deal is more than just a new loan. It is a strategic tool for optimising your finances. The most obvious advantage is the interest savings, which can reduce your monthly instalment by up to 40 per cent. In addition, you gain flexibility, as new contracts often offer better terms such as free early repayments or payment holidays. Another important point is the improvement in your credit rating. If you replace three small loans with a single loan, you reduce the number of your credit obligations, which can be viewed positively by SCHUFA. This makes future financing easier. Find out more about how to combine multiple loans and reorganise your financial situation. The next step is to check under which conditions this step is worthwhile for you personally.
Practical check: When refinancing really pays off
Not every refinancing is automatically beneficial. The crucial question is whether the interest savings outweigh the costs. The biggest hurdle is often the so-called early repayment charge, a fee charged by the old bank for lost interest income. Refinancing is usually worthwhile if the following criteria are met:
The new interest rate is at least one percentage point below the old one.
The remaining term of your old loan is still more than twelve months.
The early repayment charge demanded by the old bank is lower than your potential interest savings.
Your creditworthiness is stable or has improved since the last loan agreement.
Check in advance the exact amount of the outstanding balance and the compensation due so that you have a clear basis for making your decision. With this information, you can specifically refinance your instalment loan and save money. But what legal limits apply to the costs?
Expert knowledge: classifying prepayment compensation from a legal perspective
The fear of a high early repayment charge puts many people off refinancing. However, the legislator has set clear limits here. Under Section 502 of the German Civil Code (BGB), the compensation for instalment loans may amount to a maximum of one per cent of the outstanding balance repaid early. If the remaining term is less than twelve months, this figure drops to 0.5 per cent. Different rules apply to mortgage loans, but here too, after ten years' term, there is a special right of cancellation without additional costs under Section 489 BGB. Our expert tip: Have your old contract checked for formal errors, particularly in the cancellation information. If the information for calculating the early repayment charge is insufficient, the bank's claim to it may lapse completely. A clean loan repayment with another bank is often easier than you might think. The concrete implementation follows.
In five steps to successful debt restructuring in Stuttgart
If you want to check the terms for refinancing in Stuttgart free of charge and carry out the switch, proceed systematically. A structured process with five steps will secure you the best result:
Inventory: List all existing loans with outstanding balance, interest rate and monthly instalment.
Determine total sum: Add together all outstanding balances and ask your old bank for the exact amount of the early repayment charge.
Request a quote: Obtain non-binding offers. A „terms enquiry“ is SCHUFA-neutral, unlike a formal „credit enquiry“.
Compare offers: Pay attention not only to the effective annual interest rate, but also to flexible contract terms such as special repayments.
Conclude the new contract: The new bank usually handles the entire process and redeems the old loans for you.
This process ensures that you find a genuinely low-cost online loan with instant approval. But what effect does that have on your creditworthiness?
Creditworthiness as a lever: How refinancing can improve your SCHUFA score
A debt consolidation can noticeably improve your creditworthiness in the medium term. Instead of three or four individual loans that must be serviced on time, you only have one clear liability. This reduces the complexity of your financial profile and is viewed positively by credit reference agencies such as SCHUFA. A clean payment history for this one loan continuously strengthens your profile. Improved creditworthiness opens the door to even better interest rates for future financing projects. In this way, debt consolidation becomes a tool with which you can actively use your credit rating to improve it. For difficult starting situations, a specialist adviser can help.
Finding the best terms can be confusing. An experienced and reputable partner at your side can make the process considerably easier. In a competitive environment like Stuttgart, local market knowledge is particularly beneficial. A good adviser analyses your individual situation, compares dozens of offers and finds a tailored solution. They ensure that all cost factors are taken into account and that you genuinely save money in the end. For cases where creditworthiness is a challenge, a reputable loan broker in Stuttgart is often the best point of contact. Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific recommendations for improvement.
More useful links
Wikipedia explains the term debt restructuring, i.e. replacing existing loans with a new loan.
The Federal Statistical Office (Destatis) provides information on wealth and debt in Germany.
Statista contains statistics on the number of debtors in Germany since 2004.
The Deutsche Bundesbank publishes interest rate statistics and yields.
The Deutsche Bundesbank shows interest rate statistics for consumer loans to private households (instalment loans).
Statista provides statistics on banks' consumer loans to private households in Germany.
Verwaltung.bund.de describes the possibility of debt counselling as a public service.
The Caritas offers online debt counselling.
The Deutsche Bundesbank provides information on the base rate.
FAQ
What is the difference between a terms enquiry and a credit enquiry?
A conditions enquiry is a SCHUFA-neutral query used to obtain personalised interest rate offers. Several such enquiries do not damage your score. A credit enquiry, on the other hand, is a binding application that is stored with SCHUFA for 12 months and, if rejected, can negatively affect your score.
Can I also refinance my overdraft facility?
Yes, refinancing an expensive overdraft into a cheaper personal loan is one of the most common and sensible uses. The interest savings are often particularly high here, as overdraft interest rates are usually in the double-digit percentage range.
Does the new bank handle the termination of the old loan?
Yes, most banks offer a switching service. Once the new loan agreement has been concluded, the new provider will contact the old bank, request the exact outstanding balance and handle the settlement directly.
Does refinancing always improve my SCHUFA score?
Not immediately, but in the medium term. Consolidating several small loans into a single one is viewed positively. If you reliably make the payments on the new, lower instalment, your score will very likely improve over time.
Is there a special right to terminate my old loan?
For property loans with a fixed interest rate, after ten years there is a statutory special right of cancellation with a notice period of six months, without any early repayment penalty being charged. For standard instalment loans, early repayment is possible at any time, but subject to the compensation mentioned.
Do I have to pay for the review of refinancing terms?
No, obtaining and comparing refinancing offers via online portals or from banks is generally free of charge and non-binding. Costs only arise when you sign a new loan agreement.
