Reschedule existing installment loans to sustainably save on interest
13 May 2025
12
Minutes
Katrin Straub
CEO at nextsure
An instalment loan taken out years ago is burdening you today with high interest rates. Through targeted refinancing, you can benefit from current low interest rates and regain your financial flexibility. This article will guide you step by step on how to proceed and what to pay attention to.
The topic in brief and concise terms
Refinancing is worthwhile if the new interest rate is significantly lower than the old one, which can save thousands of euros.
The early repayment fee for instalment loans is legally capped at a maximum of one percent of the remaining debt.
By consolidating multiple loans, a single, often lower monthly payment is created, providing a better financial overview.
Recognizing potential: When refinancing is worthwhile
Refinancing is especially worthwhile when the current loan interest rates are significantly lower than those of your old contract. This can often save several percentage points. An example: With an outstanding debt of 12,000 euros and a remaining term of 48 months, a reduction in interest from eight to four percent can mean savings of over 1,200 euros. Improved personal creditworthiness since the initial contract can also secure you much better terms now. Before taking action, you should create a detailed household budget calculation to determine your savings potential. Analysing your current contracts is the first step towards noticeable financial relief.
The path to a more affordable loan: A step-by-step guide
The process of debt restructuring is straightforward and can be carried out in four clear steps. Here's how to proceed systematically:
Check the conditions: Determine the exact remaining debt, the interest rate, and the remaining term of your old loan. You can find this information in your repayment plan or inquire directly with your bank.
Calculate early repayment charge: Determine whether your bank charges a fee for early repayment. This fee is legally capped at a maximum of one percent of the remaining debt.
Obtain new offers: Compare the conditions of various banks for a debt restructuring loan without obligation. Pay attention to the annual percentage rate.
Let the loan be settled: After signing the new contract, the new bank usually handles the entire process and directly repays the old loan.
A loan from another bank can often offer the best conditions. The next key cost factor is the legally regulated early repayment charge.
Expert Tip: Minimize the Prepayment Penalty
Banks may demand compensation for lost interest income if a loan is repaid early. However, the amount of this so-called prepayment penalty is strictly regulated by law for instalment loans. It may not exceed one percent of the remaining debt if the remaining term is more than twelve months. If the remaining term is shorter, the fee even drops to just 0.5 percent. With a remaining debt of 8,000 euros, this would be a maximum of 80 euros. Our expert tip: Check your old contract carefully, because sometimes banks even waive this fee entirely. With our calculator, you can calculate the prepayment penalty online and see if the interest savings outweigh the costs. This minor hurdle should not prevent you from avoiding high interest costs.
Financial Clarity: Consolidate multiple loans into one
Frequently, not just one, but several small loans burden the household budget - from overdrafts to credit card bills to zero-percent financing. Through debt restructuring, you can consolidate these various liabilities into a single, straightforward instalment loan. Instead of many small instalments to different creditors, you will only pay one manageable monthly instalment. This not only significantly simplifies your financial planning, but often also improves your SCHUFA score, as you have fewer contractual partners. Consolidation is an effective method to reduce the monthly burden. But what conditions must you meet for this step?
Hold all the aces: The prerequisites for a successful debt consolidation
To receive an attractive offer for debt restructuring from a bank, certain criteria must be met. These are similar to those for a normal loan application. The most important requirements are:
A regular and stable income from a permanent employment relationship.
A positive SCHUFA report without negative entries.
Being of legal age and having a permanent residence in Germany.
A plausible and understandable household budget.
Your creditworthiness is the key to low interest rates. Good credit can reduce the interest rate by up to three percentage points. A new contract for an existing loan is therefore directly dependent on your financial reliability. With these conditions fulfilled, the doors to the numerous benefits of debt restructuring are wide open.
Your benefits at a glance: Save on interest, reduce your installment, stay flexible
The decision to refinance brings tangible financial benefits that go far beyond mere interest savings. You lower your monthly payment, thus creating new financial flexibility every month. At the same time, you gain flexibility, as the new contract often allows for better terms such as free early repayments or the possibility of payment breaks. A loan with a long term can further reduce the payment. Consolidating multiple debts also provides a clear financial overview with just one contact person. This makes managing your finances simpler and more transparent.
Act now and secure financial freedom
Restructuring an existing instalment loan to sustainably save on interest is not a complicated process, but a smart financial decision. You have seen that the potential savings are substantial and the hurdles, like early repayment penalties, remain manageable. Take advantage of the current interest benefits to pay off your old, expensive loans and reorganise your finances. Whether you want to optimise a single loan or consolidate multiple loans, the gain in financial control and liquidity is a crucial step towards a more worry-free future. Do not hesitate to explore your options.
Request an individual risk analysis now: Have your insurance situation reviewed free of charge and receive specific optimisation suggestions.
More useful links
Bundesbank offers statistics on interest rates and returns for consumer loans to private households (installment loans).
Bundesbank provides the MFI interest rate statistics for stocks and new business.
ECB offers a PDF document on the MFI interest rate statistics.
Bundesbank provides a datasheet on consumer loans (installment loans).
Statista offers a study on the interest rate for consumer loans (new business) to private households.
Consumer Advice Centre provides information on loans and credit and offers saving tips.
Consumer Advice Centre explains residual debt insurance, which is often expensive and provides little benefit.
Schleswig-Holstein Consumer Advice Centre calls for a legal cap on overdraft interest rates in a press release.
FAQ
What does refinancing cost?
Restructuring itself is usually free of charge. The only potential fee is the early repayment penalty for settling the old loan ahead of schedule. However, for installment loans, this may only amount to a maximum of one percent of the remaining debt if the term still exceeds one year, and 0.5 percent for a shorter remaining term.
Can I increase the loan amount with a debt restructuring?
Yes, this is a common use case. In the context of refinancing, you can take out a larger loan amount, not only to repay the old loan but also to create additional financial leeway for new purchases.
Is refinancing worthwhile even for small loans?
Even for smaller loan amounts, refinancing can be worthwhile, especially if the old interest rate is very high (e.g., with overdraft loans). The percentage savings are often significant. Carefully calculate if the interest savings exceed the small early repayment penalty.
What documents do I need for a debt restructuring?
You will usually need the last three payslips, your bank statements, a copy of your employment contract, the existing loan agreement, and a redemption certificate from your old bank that shows the exact remaining debt.
What happens after applying for debt restructuring?
After you have signed the new loan agreement and verified your identity, the new bank will pay the agreed amount directly to the old bank to settle the loan. From then on, you will only pay the new, lower instalment to your new loan partner.
Can I restructure my debts even if my creditworthiness is not perfect?
Debt restructuring is possible even with imperfect creditworthiness; however, the interest conditions may be less favorable. Consolidating multiple loans can actually improve your creditworthiness in the long run, as it organizes your financial situation.
