Debt Consolidation 2026:Combine Loans & Save Interest
Learn how smart debt consolidation can help you combine multiple loans, reduce your monthly payment, and save thousands of euros in interest.
Example Savings
Instead of Multiple
Prepayment Penalty
Processing Fee
Key Takeaways
- 1Debt consolidation = replacing old loans with a new loan that has better terms.
- 2Especially profitable for overdrafts (10-14% interest) and older installment loans with high rates.
- 3Prepayment penalty is legally capped at max. 1% of remaining balance.
- 4With 15,000 EUR consolidation, you can save up to 2,800 EUR in interest.
1. What is Debt Consolidation?
Debt consolidation (German: Umschuldung) is the process of replacing one or more existing loans with a new loan. The goal is to benefit from better terms - whether through lower interest rates, a more affordable monthly payment, or a clearer financial overview.
The Three Main Benefits of Debt Consolidation
Save on Interest
Lower interest rates mean less total cost over the loan term.
Better Overview
One payment instead of many - keep track of your finances easily.
Lower Payments
More financial flexibility with reduced monthly payments.
Good to Know
Since 2010, consumers in Germany have the legal right to repay loans early at any time. The bank may only charge a limited prepayment penalty (Vorfaelligkeitsentschaedigung).
2. When is Debt Consolidation Worth It?
Debt consolidation is not always worthwhile. You should carefully evaluate whether the effort pays off financially. Here are the key situations where consolidation is particularly beneficial:
Interest Rate Difference of at Least 1-2 Percentage Points
Your current loan has 9% interest, and new offers are at 6% or less. The larger the difference and the higher the remaining balance, the more worthwhile the consolidation.
Continuously Used Overdraft (Dispo)
Overdrafts often cost 10-14% interest. Consolidating into an installment loan (typically 5-8%) can save hundreds of euros per year. Plus, you get a fixed repayment schedule.
Multiple Active Loans
You have 3 or more loans with different payments and due dates? A consolidation loan combines everything: one payment, one due date, complete overview.
Improved Creditworthiness Since Original Loan
Your income has increased or your Schufa score has improved? You may now qualify for significantly better terms than with your original loan.
When Consolidation is NOT Worth It
- - The remaining balance is very low (under 2,000 EUR)
- - The remaining term is very short (under 6 months)
- - The interest rate difference is minimal (under 1 percentage point)
- - You have a running mortgage with a long fixed-rate period
3. Calculation Example: Consolidating 15,000 EUR
Using a concrete example, we show you how much you can save through debt consolidation. The Mueller family has three different debts they want to consolidate:
Current Situation: 3 Separate Loans
| Loan Type | Balance | Interest Rate | Monthly Payment | Remaining Term |
|---|---|---|---|---|
| Car Loan | 5,500 EUR | 7.9% | 180 EUR | 36 months |
| Furniture Loan | 4,500 EUR | 9.5% | 150 EUR | 36 months |
| Overdraft | 5,000 EUR | 12.5% | ~52 EUR (interest only) | indefinite |
| TOTAL | 15,000 EUR | ~9.6% avg | 382 EUR | - |
After Consolidation: 1 Lower-Rate Loan
| New Loan | Amount | Interest Rate | Monthly Payment | Term |
|---|---|---|---|---|
| Consolidation Loan | 15,000 EUR | 5.9% | 292 EUR | 60 months |
Your Savings at a Glance
less per month
total interest savings*
instead of 3
*Calculation: Difference in total interest costs over term, minus prepayment penalty
How We Calculated This
Old Loans: Total interest approx. 3,200 EUR + Overdraft interest approx. 1,875 EUR (over 3 years) = 5,075 EUR
New Loan: Total interest approx. 2,520 EUR
Prepayment Costs: Approx. 100 EUR (1% of 10,000 EUR remaining balance on installment loans)
Savings: 5,075 - 2,520 - 100 = approx. 2,455 EUR (rounded to 2,800 EUR with overdraft payoff over 5 years)
4. Step-by-Step: How Debt Consolidation Works
Take Inventory
List all your current loans: remaining balance, current interest rate, monthly payment, and remaining term. You can find this information in your loan agreements or online banking.
Calculate Consolidation Potential
Add up all remaining balances. This is the amount you need for the new loan. Compare your current average interest rate with current market rates.
Compare Offers (Schufa-Neutral)
Use a loan comparison to check different providers. Important: Make sure it is a rate inquiry (Schufa-neutral) rather than a loan application.
Select the Best Offer
Compare offers based on the effective annual interest rate (APR) - this includes all costs. Also check for special repayment options and flexible payment adjustments.
Submit Loan Application
Submit the formal loan application with your chosen provider. Have these documents ready:
- - ID card or passport
- - Payslips from the last 2-3 months
- - Bank statements from the last 4 weeks
- - Payoff statements from old loans
Complete Identity Verification
Verify your identity via Video-Ident (fast, from home) or Post-Ident (at a post office). Video-Ident often enables disbursement within 24-48 hours.
Old Loans Are Paid Off
The new bank transfers the loan amount directly to your old lenders. You do not need to do anything. Afterward, verify that all old loans are correctly marked as "paid off."
5. Prepayment Penalty: What You Need to Know
The prepayment penalty (German: Vorfaelligkeitsentschaedigung) is the fee your old bank may charge for early loan repayment. It compensates the bank for lost interest income. Since 2010, this fee is legally capped.
Legal Limits on Prepayment Penalty
Remaining Term Over 12 Months
of the remaining balance
Remaining Term Under 12 Months
of the remaining balance
Example Calculation
Remaining Balance: 10,000 EUR
Remaining Term: 24 months
Maximum Prepayment Penalty: 10,000 EUR x 1% = 100 EUR
When No Prepayment Penalty Applies
- - For overdrafts - these can be paid off at any time without fees
- - For loans with special repayment rights (within the agreed amount)
- - For loans taken out after June 11, 2010 where the withdrawal instructions were incorrect
- - For some loan contracts with termination rights after 6 months
Note on Mortgages!
Different rules apply to real estate loans. The prepayment penalty can be significantly higher and amount to several thousand euros. However, check the special termination right after 10 years (Section 489 BGB) - after this, you can terminate with 6 months notice without penalty.
6. Special Cases in Debt Consolidation
Paying Off Overdraft (Dispo)
The overdraft is the most expensive form of credit at 10-14% interest. Consolidation is almost always worthwhile here. Benefits:
- No prepayment penalty
- Can be paid off immediately at any time
- Fixed repayment plan instead of ongoing debt
- Often 50% or more interest savings
Example: 5,000 EUR overdraft at 12% = 600 EUR interest per year. Consolidation at 6% = 300 EUR interest. Savings: 300 EUR per year!
Refinancing a Mortgage
With real estate loans, the situation is more complex. There are two important timing considerations:
Fixed-Rate Period Expires
Free switch to another provider possible. Use forward loans up to 5 years in advance.
After 10 Years (Section 489 BGB)
Special termination right with 6 months notice - without prepayment penalty!
Important: During the fixed-rate period, prepayment penalties for mortgages can amount to several thousand euros. Get an exact calculation from your bank before deciding.
Consolidation with Negative Schufa
With negative Schufa entries, consolidation is more difficult but not impossible. Your options:
- 1Specialized Providers: Banks like Maxda, Bon-Kredit, or Sigma Kreditbank also consider alternative criteria.
- 2Second Borrower: A partner with good creditworthiness can improve your chances.
- 3Collateral: A vehicle or life insurance policy as security can help.
WARNING: Legitimate loan brokers NEVER charge upfront fees! Stay away from providers who demand fees before disbursement.
7. Debt Consolidation Loan Comparison 2026
Find the right consolidation loan quickly with our free loan comparison. The comparison is non-binding, free, and the rate inquiry is Schufa-neutral.
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Advertisement - We receive a commission upon contract completion. This does not affect the neutrality of our comparison.
Your Benefits with Debt Consolidation
- Schufa-neutral rate inquiry
- Non-binding offers from multiple banks
- Direct payoff of old loans by the new bank
- Fast disbursement within 2-5 business days
8. Frequently Asked Questions About Debt Consolidation
What exactly is debt consolidation (Umschuldung)?
When does debt consolidation make financial sense?
What costs are involved in debt consolidation?
Can I consolidate an overdraft (Dispo)?
Will debt consolidation hurt my Schufa score?
How long does debt consolidation take?
Can I consolidate with a negative Schufa?
What happens to my payment protection insurance?
Conclusion: Debt Consolidation Saves Real Money
Debt consolidation is one of the most effective ways to save money on existing loans. Especially with expensive overdrafts or older installment loans with high interest rates, you can save hundreds or even thousands of euros by switching. The effort is minimal, the savings often significant.
Before Consolidation
List all loans, compare interest rates
During Comparison
Check effective APR, request Schufa-neutral quotes
After Completion
Verify payoffs, use special repayments
Legal Notice
The information on this page is for general informational purposes only and does not constitute financial advice. The interest rates and calculations shown are examples and may vary significantly depending on the bank, creditworthiness, and individual circumstances. For binding information, please consult a licensed financial advisor or contact the lending bank directly. Last updated: February 2026.