Consolidating several loans: when is it worthwhile?

One instalment may be clearer without being cheaper

Consolidation replaces several existing commitments with new financing. The aim may be clearer organisation, lower interest or a more suitable monthly burden. What matters, however, is the total still payable from today. A smaller new instalment alone does not prove savings.

New financing is assessed individually. Existing loans do not create an automatic entitlement. A cash loan within the Consumer Credit Act (KKG) must meet the statutory requirements. If the budget is persistently unbalanced, first clarify that cause rather than merely combining several problems into one agreement.

Bring all existing agreements to the same settlement date

For each commitment, record the provider, current instalment, remaining term and settlement amount. Settlement requires an up-to-date statement from each lender. The sum of scheduled remaining instalments is not necessarily the debt to be settled, because future interest may fall away on early repayment.

Distinguish loans from leasing and card balances repaid in instalments. These agreements may have different termination conditions. Do not use a lease’s residual value as the settlement amount without checking. Outstanding fees or existing arrears must also be clarified transparently so new financing actually covers all intended commitments.

Prepare a like-for-like calculation

Compare two routes: all remaining payments under the existing agreements and every payment under the new financing. Use the same starting date. Interest already paid is a past cost that switching does not reverse. The decision concerns amounts still avoidable and costs newly arising.

A model illustrates the term effect: financing 20'000 francs at an assumed effective annual rate of 6 percent over 36 months, without additional costs, gives a rounded monthly instalment of 607 francs and total repayment of 21'852 francs. Over 60 months, the instalment falls to 385 francs, but total repayment rises to 23'111 francs. Totals use unrounded model instalments.

This example is neither an offer nor an assessment of a particular old contract. It shows why a lower new instalment may have different financial implications. Actual savings can only be established once remaining payments on your existing contracts and the specific new offer are available.

Show additional cash separately

If you need new money as well as refinancing, comparison becomes more complex. A larger overall agreement may both replace old debt and fund further purchases. Show these purposes separately. Otherwise, higher total repayment might appear costly solely because of consolidation when new needs are also included.

Conversely, an additional payout must not be described as a saving. It is newly borrowed money that must be repaid. Ask how much goes to previous providers and how much remains for you. Read more in Increasing your loan.

Check affordability and contractual terms

• Does the new total amount fit the assessed financial situation?
• How long until repayment is complete?
• Which additional products and costs are included?
• Which previous agreements are actually terminated?
• How are overlaps and payment dates organised?

A longer term may ease the month but extends your obligation. For statutory affordability, the 36-month approach remains relevant to a KKG cash loan. Switching must therefore not be understood as a way around insufficient affordability. Full household costs remain.

Follow settlement through to completion

Do not stop existing payments merely because of a new enquiry. Wait for confirmed execution and have completion of the old obligations documented. Check whether standing orders need adjustment and whether a final statement is still due. Approved new financing does not automatically mean every old agreement is already closed.

If a revolving card balance has been settled, the card may remain usable depending on the agreement. New use can quickly undo the relief. Decide consciously which limits and payment options suit your budget. Consolidation’s usefulness also depends on not immediately creating fresh parallel debt.

For the legal basis of settlement, read Early repayment. With a persistent deficit, independent advice on the whole debt situation is often the more sensible first step.

Frequently asked questions

Is a single instalment automatically cheaper?

No. Compare every remaining payment and the term, not just the monthly amount.

Can new purchases be financed too?

This can be assessed, but increases the new need. Additional cash and settlement must be shown separately.

When may I stop old standing orders?

Only once settlement and any remaining payment obligations have been clarified and confirmed.

Sources and information date

Information as of 13 October 2026. The applicable rules, individual assessment and contract documents are decisive.

• Consumer Credit Act, Art. 17 and 28

Credit must not be granted if it would lead to over-indebtedness. A budget calculation provides a non-binding indication, not a loan offer.