Loan refinancing at another bank: Save interest online and optimize finances
24 May 2025
7
Minutes
Katrin Straub
CEO at nextsure
For years, you've been paying off a loan, but the interest rates from back then are far too high today. Transferring your loan to another bank can save you hundreds or even thousands of euros. Discover how to easily switch online and what legal conditions you should be aware of.
The topic in brief and concise terms
Refinancing a loan with another bank often makes sense with an interest advantage of just 0.2 percentage points, as the savings exceed the costs.
The early repayment charge for installment loans is legally capped at a maximum of one percent of the remaining debt, making the switch manageable.
The entire refinancing process, including document upload and identity verification, can now be completed fully online today.
The Basics: What a Debt Consolidation Means for You
A credit refinancing, often referred to as debt restructuring, is the switch from an existing loan to a new bank with better terms. The aim is to reduce your monthly burden through a lower interest rate or to shorten the term. A general rule of thumb is that restructuring is worthwhile if the new credit interest rate is only 0.2 percentage points lower than the old one. This means the interest savings most often exceed the potential switching costs.
The benefits of a successful restructuring are varied and go beyond mere interest savings. Here are the four main points:
Lower monthly payment: Lower interest rates reduce your regular financial burden.
Better overview: Consolidate multiple small loans into a single one and maintain an overview.
Quicker debt freedom: With the same instalment and lower interest, you can pay off the loan faster.
More flexibility: Adjust the term and instalment amount in the new contract to suit your current life situation.
This strategic step enables you to actively improve your financial health instead of being tied to outdated and expensive contracts. The next section will show you how this process works in practice.
The Process: Switch your loan online in four steps
Carrying out a loan refinancing with another bank is a clearly structured process that can largely be completed digitally today. First, you should check the terms of your old contract, particularly the outstanding debt and notice periods. Then you obtain various offers using online comparison tools, with the effective annual interest rate being the crucial comparison factor. Once you find a suitable offer, you can submit the application directly online.
For the application, you usually only need a few documents. Most banks require the following:
Proof of income for the last two to three months.
A copy of the existing loan contract.
A settlement statement from your old bank, showing the exact remaining amount.
A signed power of attorney for repayment, allowing the new bank to pay off the old loan directly.
Many of these documents, like bank statements, can be uploaded directly with the online application. After approval, the new lender transfers the amount directly to the old bank, thus settling the liability. A digital loan request significantly speeds up this process. However, before switching, you need to consider a potential hurdle: the early repayment penalty.
Keeping an Eye on Costs: Understanding Early Repayment Charges
If you cancel an instalment loan before the agreed term ends, the bank misses out on planned interest income. As compensation, it can demand a so-called early repayment fee. However, the amount of this fee is legally capped to protect consumers. According to § 502 of the German Civil Code (BGB), the compensation may not exceed one per cent of the remaining outstanding balance. If the remaining term of your loan is less than twelve months, this rate falls to 0.5 per cent.
An example calculation illustrates this: With an outstanding balance of 10,000 euros and a remaining term of more than one year, the bank may charge a maximum fee of 100 euros. These costs are often significantly lower than the interest savings from the new, cheaper loan. A careful comparison is therefore crucial. With an online tool, you can calculate the early repayment fee and weigh it against your savings potential. The exact legal basis provides additional security.
Legal foundations and expert tips for refinancing
The Bürgerliche Gesetzbuch (BGB) clearly regulates the framework conditions for loan repayment. In addition to capping the early repayment penalty for consumer loans (§ 502 BGB), there is a special right to terminate loans with long fixed interest rates. According to § 489 BGB, you can terminate any loan agreement with a fixed interest rate of more than ten years after ten years have elapsed, with six months' notice – completely free of additional costs. This is particularly relevant for older property financing.
Our expert tip: Check your old loan agreement for formal errors, especially in the revocation instructions. Contracts concluded after 20 March 2016 must contain exact details on the calculation of the early repayment penalty. If these are missing, the bank's claim for compensation may lapse. Such an examination can be financially worthwhile when refinancing an old loan. With this knowledge, you can specifically identify situations where repayment is most beneficial.
Typical use cases: When refinancing a loan is particularly worthwhile
A loan refinancing is not always the best solution in every situation, but in certain cases, it offers significant financial advantages. Especially when current market interest rates are significantly lower than the interest rate of your old contract, the savings potential is high. Even a difference of one percentage point can mean savings of several hundred euros over the years. Consolidating debts is one of the most common reasons for refinancing.
Here are three scenarios where refinancing is particularly sensible:
Consolidating multiple loans: Are you paying off several small installment loans or credit card debts? By consolidating multiple loans, you often secure a better interest rate and only need to manage one installment.
Replace expensive overdrafts: The overdraft on your current account has interest rates of over ten percent and is extremely costly. A lower-interest personal loan is almost always the better alternative to balance the account.
Adapting to life changes: Has your income increased and you wish to pay off the loan faster? Or do you need to lower your monthly installment due to new expenses? Refinancing offers this flexibility.
These examples demonstrate how targeted loan refinancing can improve your financial structure, which is easier than ever today thanks to digital processes.
The Digital Advantage: How nextsure Simplifies the Process
The days of cumbersome paperwork and appointments at bank branches are over. Thanks to digital processes, switching a loan to another bank can be managed quickly and easily from home. As a digital insurance and finance portal, nextsure focuses on exactly this efficiency. We provide you with the tools to transparently analyse your finances and identify potential areas for optimisation. The entire process from requesting an offer to concluding a contract is designed for a simple and user-friendly online experience.
You can compare various loan options and securely upload the necessary documents with just a few clicks. By stating the purpose "debt restructuring" in the application, you signal to the new bank that you're looking to organise and not increase your existing liabilities. This often improves the chances of approval at top conditions. Use our expertise to assess your financial situation and make the right decisions for your future.
Request an individual risk analysis now: Have your financial situation checked for free and receive concrete optimisation suggestions.
More useful links
Wikipedia provides a comprehensive overview of the term restructuring and its meaning.
Federal Statistical Office (Destatis) provides datasets on loans and online transactions that offer statistical insights.
Statista offers statistical data and forecasts on the topic of loans and debts.
Deutsche Bundesbank displays current interest rates and yields for consumer loans to private households.
Consumer Advice Centre explains the rights of borrowers in loan agreements and provides important information.
Stiftung Warentest offers an independent test and comparison of various loans.
Stiftung Warentest provides detailed information on the redemption of construction loans and the permissible amount of early repayment penalties.
European Central Bank (ECB) contains statistical data on interest rates for loans to private households and companies.
FAQ
How long does it take to repay a loan at another bank?
The process can move very quickly. After the online application and the digital submission of all documents, the review and payout often take only a few working days. The entire process is usually completed within one to two weeks.
Does debt restructuring improve my SCHUFA score?
In the short term, a credit enquiry can slightly impact the score. In the long term, consolidating several loans into one can have a positive effect on your SCHUFA score, as it signifies financial stability and better oversight.
Can I increase the loan amount with a debt restructuring?
Yes, that is possible. As part of the refinancing, you can apply for a higher loan amount with the new bank than is necessary to pay off the existing loan. The prerequisite is an appropriate credit rating.
Do I need to cancel the old loan myself?
No, in most cases not. If you provide the new bank with a redemption authorisation, it will handle all communication with the old bank, including the termination and redemption of the loan.
What happens to my residual debt insurance?
If you pay off your old loan, you can generally cancel any associated residual debt insurance. You may even receive a refund of some of the contributions you have already paid, which means additional savings.
Is refinancing worthwhile even for small loans?
Yes, even with smaller loan amounts, refinancing can be worthwhile, especially if you are paying off an expensive overdraft or credit card debt. The difference in interest rates is often particularly high here and results in noticeable relief.
