easycompr

Debt consolidation: refinance and compare loans

Debt consolidation means paying off a running loan early with a new one — usually to get a lower rate or combine several debts into one. Whether it's worth it isn't decided by the monthly instalment, but by the total cost.

When debt consolidation can pay off

Consolidation replaces one loan with another. It's only worth it if the interest saved is bigger than what switching itself costs.

A clearly lower new APR

Compare the annual percentage rate of the old and the new loan, not the instalment. The longer the remaining term, the more interest you can save.

You're bundling expensive debt

An overdraft or credit card balance is often far more expensive than a personal loan. Bundling them into one loan often means a single rate and a single interest cost.

Your credit standing has improved

A higher income or fewer obligations can mean a cheaper new loan. Nothing is guaranteed — the bank decides.

When it usually isn't worth it

With a short remaining term, a high early repayment penalty, or when only the instalment drops because the term gets longer: the rate falls, but total cost can rise.

What early repayment can cost

You may repay a consumer loan early, in full or in part, at any time. The current lender may charge an early repayment penalty for it — capped by law.

Remaining term of the old loanMaximum allowed penalty
More than one year1% of the amount repaid early
Up to one year0.5% of the amount repaid early

Also capped by the remaining interest

The penalty can never be higher than the interest that would still have accrued until the loan's agreed end date.

Ask in writing

Ask your current bank for the outstanding balance, the payoff amount, and the exact penalty — in writing, so you have a firm figure to work with.

The new loan costs too

On top of the new loan's interest there can be arrangement or disbursement fees. Both are already included in the APR — which is why it's the right figure to compare.

How to go about it

Order and care decide whether consolidation actually makes things cheaper, or just different.

1. Work out the old loan

Add up the outstanding balance, payoff amount, and the interest that would still accrue until the agreed end. That's the number the new loan has to beat.

2. Get offers via soft inquiries

A soft (conditional) inquiry doesn't affect your credit score. Only once an offer fits do you submit the real application.

3. Compare at the same remaining term

Otherwise the new loan only looks cheaper because it's shorter. Compare total cost, not instalments.

4. Pay off the old loan only after the new one is confirmed

State the payoff as the purpose; some banks pay the old lender directly.

No upfront fee

A legitimate credit broker doesn't charge anything in advance — by law, they're only entitled to a fee once the loan actually goes through.

easycompr doesn't quote interest rates and doesn't calculate any loan itself. The comparison runs with our partners; what applies to you is set by the provider — it depends on your credit standing, amount, and term.

Compare here

Compare directly with our partners — free and without registration.

Frequently Asked Questions

Can I always repay my personal loan early?

Yes. You may repay a consumer loan early, in full or in part, at any time. The lender may charge an early repayment penalty, capped by law at 1% of the amount repaid early, or 0.5% if the remaining term is one year or less.

Can I combine several loans into one?

Yes. With debt consolidation you take out a new loan and use it to pay off several existing ones. What matters is comparing total cost: a longer term lowers the instalment, but the interest adds up.

Does looking for a new loan hurt my credit score?

Not if it's a soft (conditional) inquiry — that doesn't affect your score. Only a real application or a signed contract gets recorded. Ask which kind of check you're triggering.

Does this apply to mortgages too?

No, this page is about personal loans. Mortgages follow different rules, including for early termination rights and penalties. Get separate advice before cancelling one.

Loans

Auch vergleichen