Refinancing loan with instant approval: How to smartly pay off expensive existing loans and reduce your monthly instalment
04.05.2025
7
Minutes
Katrin Straub
Managing Director at nextsure
Are high interest rates on old loans putting a strain on your monthly budget? A debt consolidation loan with instant approval can significantly reduce your financial burden. Find out how you can pay off an expensive old loan in just a few steps, reduce your instalments by up to 50 per cent, and regain full control over your finances.
The topic in brief and concise terms
A debt consolidation loan with instant approval can reduce the monthly instalment by up to 50 per cent and shorten the process to just a few days.
The early repayment compensation for consumer loans is legally limited to a maximum of one per cent of the outstanding debt.
After ten years, loans with a long fixed-interest period can be terminated without additional costs (§ 489 BGB).
Reduce interest costs: Why reviewing old loans is worthwhile for you now
Old loan agreements often have one decisive disadvantage: high interest rates that cost hundreds or thousands of euros over the years. A personal loan with an interest rate of seven per cent was common a few years ago; today, only three to four per cent is often due. This difference of just three percentage points can mean savings of over 900 euros on an outstanding balance of 15,000 euros over a term of four years. Many overlook that consolidating several smaller loans into a single loan improves clarity and the SCHUFA score. The review of existing contracts is the first step to unlocking this savings potential. With a favourable debt consolidation loan, the financial burden can often be noticeably reduced straight away. Analysing your current terms quickly shows whether paying off the remaining debt makes sense for you.
Faster relief: the digital application for a refinancing loan with instant approval
A refinancing loan with instant approval significantly speeds up the entire loan refinancing process. Thanks to digital processes, you often receive a provisional loan approval within 30 seconds. The application is completed entirely online, without the hassle of paperwork. Instead of waiting weeks, disbursement is often possible in a single day. If you wish, the bank even takes care of the entire process and cancels the old loan for you. To ensure a smooth process, you should have a few documents ready. Here is a list of the documents typically required:
Valid identity card or passport for identification.
The last three payslips for credit assessment.
The loan agreement to be settled, including the outstanding balance.
Bank statements for the last four weeks.
With a complete digital loan application, you create the basis for fast and straightforward processing. This allows you to secure better terms and financial relief more efficiently.
Expert tip: Minimise early repayment charges and make use of legal advantages
When a loan is repaid early, the existing bank often charges an early repayment fee as compensation for lost interest. However, the amount of this fee is clearly regulated by law. Under Section 502 of the German Civil Code (BGB), compensation for consumer loans may amount to a maximum of one per cent of the outstanding balance. If the remaining term is less than twelve months, the rate falls to just 0.5 per cent. Our expert tip: Check the right of cancellation under Section 489 of the BGB. Loan agreements with a fixed interest period of more than ten years can be terminated completely free of charge after this period expires, subject to a six-month notice period. This provision offers significant potential savings that many borrowers are not aware of. A discussion about the calculation of the early repayment fee can therefore be worthwhile. This ensures that you do not pay more than necessary and make full use of all legal options.
Practical check: when refinancing really pays off for you
Debt restructuring is particularly worthwhile if you can benefit from significantly lower interest rates or consolidate several loans. A typical scenario is replacing an expensive overdraft facility, which is often charged at more than ten per cent. By converting it into an instalment loan with an interest rate of four per cent, you save real money. A specific calculation example illustrates the potential:
Existing loan: Remaining debt of 10,000 euros, interest rate 8 per cent, monthly instalment 244 euros.
New debt restructuring loan: Loan amount 10,000 euros, interest rate 4 per cent, monthly instalment 226 euros.
Savings: You save 18 euros per month and, over the same term, pay more than 850 euros less.
Particularly when combining several loans, there is a double advantage: You not only reduce the overall instalment, but also improve your financial overview. Instead of transferring three or four instalments to different creditors, you now service just one single, cheaper loan. Such a consolidation of loans creates more order in your finances. The next step is to assess how this affects your creditworthiness.
Optimise creditworthiness: How refinancing affects your SCHUFA score
Debt restructuring can have a positive effect on your Schufa score if carried out correctly. The consolidation of several small loans into a single loan is often viewed by Schufa as a sign of financial organisation. Instead of managing three or four credit lines, you demonstrate reliability and clarity with a single instalment. It is important when obtaining offers to ensure that the bank only makes a „request for credit conditions“. This is Schufa-neutral and, unlike a formal „credit enquiry“, has no impact on your score. An improved score can in future give you access to even better interest rates. Replacing a continuously used overdraft facility with a personal instalment loan is also viewed positively, as this is considered a more sustainable form of financial management. Debt restructuring therefore not only optimises your current costs, but also invests in your future financial flexibility. Request an individual risk analysis now: Have your insurance situation checked free of charge and receive concrete suggestions for optimisation.
More useful links
Bundesministerium der Justiz und für Verbraucherschutz provides the full legal text of Section 491 of the German Civil Code, which governs the legal basis for consumer loan agreements.
Bundesarbeitsgemeinschaft Schuldnerberatung e.V. provides comprehensive information and support on debt counselling and financial over-indebtedness.
ifo Institut examines private household debt in Germany in this article and presents current research findings.
FAQ
How high is the early repayment charge when refinancing?
For consumer loans concluded after 10 June 2010, the early repayment compensation may amount to a maximum of one per cent of the outstanding remaining debt repaid. If the remaining term is less than one year, it is only 0.5 per cent.
What does instant approval mean for a refinancing loan?
Instant approval means that the bank makes a provisional credit decision within minutes after an automated online review of your data. The final approval and payout take place after successful identification and final review of the documents.
Will the new bank take over repaying the old loan?
Yes, many banks offer a switching service. With a repayment authorisation, they take care of cancelling the existing loan and transferring the outstanding balance to the previous bank, which makes the process much easier for you.
Can I also use a debt consolidation loan to top up?
Yes, as part of a refinancing arrangement, you can often also increase the loan amount. This not only allows you to pay off the old loan, but also creates additional financial room for other plans.
What documents do I need for the application?
Usually, you will need proof of identity (ID card), recent proof of income (payslips), bank statements and the contract details of the loan to be repaid, including the current outstanding balance.
Is there a way to completely avoid the early repayment charge?
Yes, if your loan agreement has a fixed interest period of more than ten years, you can terminate it after the ten years have elapsed in accordance with Section 489 BGB, giving six months’ notice, without having to pay an early repayment compensation fee.
