Debt restructuring from multiple small loans into a single payment: Regain financial control
29 Apr 2025
8
Minutes
Katrin Straub
CEO at nextsure
Juggling multiple instalments for small loans and losing track? Refinancing can simplify your finances and save you hundreds of euros per year. Discover how you can regain full control with just one instalment.
The topic in brief and concise terms
Debt restructuring consolidates multiple loans into a single installment, which improves clarity and can reduce the monthly burden.
Consolidating loans can positively impact your SCHUFA score, as a single loan indicates a lower risk.
The costs for early loan repayment (prepayment penalty) are legally limited to a maximum of one percent of the remaining debt.
Breaking the Cost Trap of Small Loans
Many consumers underestimate the total costs of three or more small loans, which often exceed the market average by five percent. Managing separate instalments for the smartphone, furniture, and the recent car repair leads to a complex financial situation. Switching from an expensive overdraft to an instalment loan alone can reduce interest costs by more than 50 percent. Such financial fragmentation can lower your SCHUFA score by more than ten points, as multiple ongoing loans are assessed as a higher risk. By consolidating several loans, you not only regain clarity but also establish a solid foundation for your financial future. This financial reorganisation is the first step towards an optimised and stress-free household management.
Achieve financial clarity through a single loan
Consolidating multiple small loans into a single instalment simplifies your debts into one manageable loan. An interest saving of just 0.2 percentage points can already mean savings of several hundred euros over the term. The process to a new financial overview is achievable in four clear steps:
List liabilities: Gather all loans with outstanding balance, interest rate, and monthly instalment to determine a total amount, for example, 15,000 euros.
Obtain loan offers: Request at least three comparative offers for a debt restructuring loan over the determined total amount.
Cost-benefit analysis: Contrast the interest savings against potential costs, such as an early repayment fee of no more than one percent.
Contract conclusion and settlement: After signing the new contract, the new bank usually settles the old loans directly within seven business days.
This consolidated approach reduces your monthly administrative workload by at least 75 percent. The clear structure with just one instalment facilitates budget planning and prevents missed payments, paving the way for improved creditworthiness.
Actively improve creditworthiness and signal financial stability
Consolidating three or more loans into a single loan is viewed positively by SCHUFA and can improve your score by up to 15 points. A single, properly serviced instalment loan indicates much greater financial control than several small liabilities. Banks consider customers with only one loan to be 20 percent less risky. Reducing the number of your creditors is a clear signal of financial consolidation and stability. Use debt restructuring to improve your credit rating to secure better terms for future financing in the long term. The financial order thus created is the foundation for the next step: analysing potential hurdles in the debt restructuring process.
Navigating legal hurdles and cost traps safely
When paying off older loans early, a prepayment penalty may apply, but this is clearly limited by law. According to § 502 of the Civil Code, this may not exceed one percent of the remaining debt for consumer loans. If your loan runs for less than twelve months, this rate even drops to 0.5 percent. Our expert tip: Check your old loan agreement for errors in the cancellation policy that could exclude a claim to compensation for the bank. The EU Consumer Credit Directive further strengthens your rights by ensuring high transparency in credit costs. You should avoid the following pitfalls:
Incomplete listing of all existing debts.
Ignoring the prepayment penalty in the cost calculation.
Taking out expensive payment protection insurance without necessity.
Multiple loan inquiries at different portals within a short period, which temporarily lowers creditworthiness.
Careful planning and knowledge of the legal framework are crucial to make the debt restructuring successful and cost-efficient. With this knowledge, you can approach the process strategically.
The Strategic Path to Successful Debt Restructuring
A successful debt restructuring starts with a precise assessment of your finances, which takes no longer than 60 minutes. Add up the remaining debts of all your loans to determine the exact amount needed for the new restructuring loan. Use online comparison calculators to submit non-binding condition requests that do not negatively affect your SCHUFA score. A customer who consolidates three loans with an average interest rate of eight percent into a new loan with five percent interest saves over €300 annually on €10,000 remaining debt. Once you find the right offer, the new bank often takes over the entire redemption process for you. With the right strategy, you can not only pay off an expensive overdraft loan but also optimize your entire financial structure. Request an individual risk analysis now: Have your insurance situation checked for free and receive specific optimization suggestions.
More useful links
Wikipedia explains the term 'Umschuldung' in general.
The Verbraucherzentrale provides tips on saving money with loans and borrowings.
The Statistische Bundesamt offers statistical information on wealth and debt in Germany.
A press release from the Statistische Bundesamt addresses a specific topic.
The Deutsche Bundesbank contains statistics on household debt in Germany, particularly in relation to the residential real estate market.
Under Gesetze im Internet, you can find the Banking Act (KredWG).
A study report by the Verbraucherzentrale deals with consumer credit, credit experiences, and credit attitudes.
The Bundeszentrale für politische Bildung offers information on the issue of household over-indebtedness.
The Gabler Wirtschaftslexikon provides a definition of 'Umschuldung'.
FAQ
What requirements must I meet for a refinance?
The requirements are similar to those for a regular loan application: you need a regular income, must be of legal age, and demonstrate sufficient creditworthiness. A clean payment history is advantageous.
How long does refinancing take?
The entire process from application to the repayment of old loans usually takes between one and three weeks. This depends on the speed of the involved banks and the completeness of your documents.
Can I also reschedule an overdraft or credit card debts?
Yes, refinancing expensive overdraft facilities or credit card debts into a more affordable installment loan is particularly sensible. This is where the savings potential is greatest, due to the high interest rates associated with these types of loans.
What is early repayment compensation?
The early repayment fee is a charge that the bank demands as compensation for the interest it misses out on due to the premature repayment of your loan. For installment loans, it is legally capped at one percent of the remaining debt.
Do I have to cancel the old loans myself?
No, in most cases the new bank offers a transfer service. This means they contact your old creditors, inquire about the exact remaining debt, and handle the complete repayment for you.
Can I also increase the new loan amount?
Yes, as part of refinancing, you can often increase the new loan amount to give yourself additional financial leeway. The condition is that your creditworthiness is sufficient for the higher amount.
