Extra payments on loans in Germany 2026
You can repay a German consumer loan early. Section 500 of the BGB gives you that right as a consumer, and the prepayment penalty is capped at 1 percent under Section 502 BGB. Here is how extra payments work, the law behind them, and the actual savings.
Ratenkredit penalty cap
Repayment right
BGB consumer right
Mortgage exit right
Key takeaways
- 1Section 500 BGB lets you repay a consumer loan in whole or in part at any time. The bank can charge a prepayment penalty, but the cap is 1 percent of the prepaid amount, falling to 0.5 percent if less than 12 months remain.
- 2On a 20,000 EUR Ratenkredit at 5 percent over 60 months, putting 3,000 EUR toward the principal each year cuts the term by about 24 months and saves roughly 1,350 EUR in interest.
- 3Extra payments work like a guaranteed, tax-free return. If your loan rate is 6 percent, every euro of extra payment behaves like a 6 percent risk-free investment.
- 4Timing matters. An extra payment in year one saves more than the same payment in year five, because there is more interest left to offset early in the loan.
- 5Mortgages are a different game. Sondertilgung for a Baufinanzierung usually requires a contract clause, typically capped at 5 to 10 percent of the loan per year. After 10 years, Section 489 BGB gives you an exit right without any penalty.
1. What counts as an extra payment
A normal installment covers both interest and principal. An extra payment (Sondertilgung) goes entirely toward the principal, which means the interest you owe from the next month is calculated on a smaller balance. The effect compounds. The earlier in the loan you make the extra payment, the more interest it offsets, because there is more interest left on the schedule.
In practice, an extra payment is any transfer to your loan account that exceeds the agreed monthly rate. Most lenders require a minimum of 500 to 1,000 EUR, and many contracts only allow extra payments on specific dates (year-end is common). The dates and minimums are spelled out in your loan agreement.
Why the timing matters
With a standard installment, part of each payment covers interest. With an extra payment, the full amount goes to principal. That makes every euro of extra payment more effective at reducing your total loan cost than a euro of your regular installment, especially in the early years.
2. Extra payment calculator: see your interest savings
Enter your loan amount, rate, and term to see how an annual extra payment changes your total interest and your payoff date.
Monthly payment
€390
Interest without
€3,375
Interest saved
€1,186
Shorter term
24 mo.
Simplified annuity calculation at a constant effective rate; the annual extra payment is applied at the end of each 12-month block. Actual figures depend on your loan contract and the bank calculation method.
3. Three examples with the real math
The numbers below use simple annuity calculations. Your actual results will vary based on the rate you are offered and the specific terms of your contract. They give you the right order of magnitude.
| Loan | Rate | Original term | Monthly | Extra payment | New term | Saved |
|---|---|---|---|---|---|---|
| 10,000 EUR | 6.0% | 48 mo | 234.85 EUR | 2,000 EUR (after 12 mo) | 38 mo | 380 EUR |
| 20,000 EUR | 5.0% | 60 mo | 377.42 EUR | 3,000 EUR / year | 36 mo | 1,357 EUR |
| 50,000 EUR | 6.5% | 84 mo | 744.19 EUR | 5,000 EUR / year | 54 mo | 5,325 EUR |
A note on these numbers
The examples use simplified calculations for illustration. Your actual savings depend on the specific terms of your loan agreement, including whether extra payments are free or subject to a fee. For personalised numbers, use our loan calculator.
4. The legal side: what the BGB actually says
Three sections of the Bürgerliches Gesetzbuch are worth knowing. The relevant law changes depending on whether you have a consumer loan (Ratenkredit) or a mortgage (Baufinanzierung).
Section 500 BGB: your right to repay
Section 500 paragraph 2 BGB gives consumers the right to repay a loan in whole or in part at any time. This right cannot be excluded by contract. It applies to standard consumer credit, including car loans, personal loans, and small loans. For mortgage-style loans with a fixed interest period, early repayment during the lock-in is only allowed for legitimate reasons, such as selling the property.
Section 502 BGB: the prepayment penalty cap
If you make an extra payment and your contract does not include a free Sondertilgung clause, the bank can charge a prepayment penalty (Vorfälligkeitsentschädigung). Section 502 BGB caps this for consumer loans as follows.
| Remaining term | Maximum VFE | On 10,000 EUR |
|---|---|---|
| More than 12 months | 1.0% of prepaid amount | 100 EUR |
| 12 months or less | 0.5% of prepaid amount | 50 EUR |
Section 489 BGB: the 10-year exit
Section 489 paragraph 1 number 2 BGB is not an extra payment right, it is a termination right. It lets you terminate a loan with a fixed interest period after 10 years from full disbursement, with 6 months notice and zero prepayment penalty. This matters most for 15 or 20 year mortgages, where it gives you an escape hatch at the 10-year mark regardless of what the original contract said.
5. Things to watch before you transfer the money
Extra payments are almost always a good idea, but a few details deserve attention.
Prepayment penalty
If your contract does not include a free extra payment clause, the bank may charge a fee. The 1 percent / 0.5 percent caps from Section 502 BGB apply. If the penalty eats most of the interest you would save, the extra payment loses its appeal.
Minimum amounts
Most banks require 500 to 1,000 EUR per extra payment. Smaller amounts are usually rejected. Check your loan agreement for the specific figure.
Timing restrictions
Many contracts only allow extra payments on certain dates, such as year-end or the anniversary of your contract. Missing the deadline means waiting another full year. Mark it in your calendar.
Annual caps
Some contracts cap extra payments at 5 percent or 10 percent of the remaining balance per year. If you have a larger sum available, you may need to spread it across multiple years. For existing loans with unfavourable terms, refinancing could be an option worth exploring.
6. Ratenkredit vs. Baufinanzierung: two different rule books
A consumer installment loan and a mortgage look similar on paper, but the Sondertilgung rules are not the same.
| Feature | Ratenkredit | Baufinanzierung |
|---|---|---|
| Legal right to repay | Yes, Section 500 BGB (any time) | No, only by contract |
| Typical annual cap | None (full or partial) | 5 to 10% of loan per year |
| Cost without clause | Max 1% VFE under Section 502 BGB | Full VFE (lost interest margin) |
| Interest surcharge for the option | Rare, usually included | About 0.05 to 0.25 pp |
| 10-year exit | Not relevant (short term) | Yes, Section 489 BGB without VFE |
| Typical rates (June 2026) | About 5 to 8% effective | About 3.5 to 4.5% effective |
When you take out a mortgage, it pays to negotiate the Sondertilgung clause from the start. Up to 5 percent of the loan per year is often available without a rate surcharge. Higher Sondertilgungsrechte (10 percent or more) can add 0.05 to 0.25 percentage points to your rate. Current mortgage rates for our Baufinanzierung comparison give you a sense of where the market sits in June 2026.
7. KfW loans: extra payments depend on the program
KfW (Kreditanstalt für Wiederaufbau) offers subsidised loans for housing and energy projects, and each program has its own Sondertilgung rules. Not every program allows extra payments.
| KfW program | Extra payment allowed? | Conditions |
|---|---|---|
| 124 (Wohneigentum) | No | Partial repayment not provided |
| 134 (Genossenschaftsanteile) | Yes | Free from 1,000 EUR |
| 270 (Erneuerbare Energien) | Limited | Depends on term variant, VFE possible |
Check the conditions of your specific KfW program before making an extra payment. For programs without a Sondertilgung option, the Section 489 BGB termination right after 10 years remains as an alternative. For barrier-free renovation financing under KfW 455-B, Sondertilgung rules differ again.
8. Tax angle (Germany-specific)
Sondertilgungen are not tax-deductible. They are principal repayments, not interest. You cannot claim them on your Steuererklärung for a self-used property or a consumer loan.
For rented properties, the situation is more nuanced. Interest payments on a rental-property mortgage count as Werbungskosten and reduce your taxable rental income. A Sondertilgung reduces future interest payments, which indirectly reduces your future Werbungskosten. The Vorfälligkeitsentschädigung can be deductible as Werbungskosten under certain conditions, for example when the early repayment is linked to the sale of the property. Talk to a Steuerberater before making this call.
9. When does an extra payment make sense?
The short answer: when the loan rate is higher than the after-tax return you could earn elsewhere. The long answer depends on a few things.
Go for it
- Your loan rate is higher than the realistic after-tax return you can earn.
- You keep an emergency fund of three to six months of expenses intact.
- Your contract allows free extra payments, or the penalty is small.
- You have a long remaining term, so the compounding has time to work.
- You want to be debt-free sooner.
Think twice
- The payment would drain your emergency savings.
- The prepayment penalty eats most of the interest savings.
- You have higher-cost debt elsewhere (an overdraft, for example).
- Only a few months remain on the loan.
- You know a major expense is coming soon.
The simple rule
A 6 percent loan means every euro of extra payment gives you a 6 percent return, tax-free. To beat that in a low-risk investment, you would need roughly 8 percent pre-tax after the 25 percent Abgeltungsteuer plus 5.5 percent Solidaritätszuschlag (the math: 6 / 0.73625 ≈ 8.15). For most people, that is a tall order. The extra payment usually wins.
10. How to actually request an extra payment
The process is straightforward but worth doing carefully.
Check your loan agreement
Look for the Sondertilgungsklausel. Confirm the maximum amount, eligible dates, and any fees.
Keep your emergency fund intact
Hold at least three months of expenses in reserve before you pay extra.
Notify your bank in writing
A message through online banking works in most cases. Specify the amount and the date you want the payment booked.
Mark the transfer clearly
Use the Verwendungszweck "Sondertilgung" and include your contract number.
Review the updated Tilgungsplan
The bank should send a new repayment schedule after the booking. Verify the remaining balance and the new term are what you expected.
11. Compare loan offers with free extra payment options
Looking for a loan that lets you make extra payments without penalties? Use the comparison below. When reviewing offers, pay special attention to the extra payment terms in the fine print.
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12. Frequently asked questions
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Legal notice
The information on this page is for general guidance only and does not constitute financial or legal advice. The calculation examples use simplified assumptions for illustration. Your actual savings depend on the specific conditions in your loan agreement. For binding advice, consult a licensed financial advisor (Finanzberater) or speak directly with your bank. Last updated: 1 July 2026.