Refinancing a loan: Reasons and situations
Combine loans, adjust term and monthly instalments: the interest rate is not the only reason for refinancing.
Combine loans, adjust term and monthly instalments: the interest rate is not the only reason for refinancing.
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1. Non-Binding Request
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2. Receive and review loan offer
We submit your loan request to a Swiss lender only with your consent. We’ll discuss the offer with you – the decision remains entirely yours.
3. Sign the contract and receive your loan
Upon signing, the 14-day withdrawal period starts. Once it has elapsed, your loan will be transferred to your bank account.In a loan refinancing, a current loan agreement is replaced by a new contract: the outstanding balance is transferred to a new loan agreement – often with adjusted conditions such as interest rate or term, and usually with an increase in the loan amount.
In most cases of refinancing, the outstanding amount is topped up with an additional sum. The new contract therefore combines the old and new loan amounts. This total is offered by the new lender, and the amount, interest rate and term are renegotiated for the entire sum.
Another reason for refinancing is to reduce the monthly instalment. By changing the loan term, the monthly burden is lowered and adapted to your financial situation. This is especially advisable if you risk falling into arrears. If you notice that the monthly instalment is putting too much strain on your budget, it is best to enquire early to explore refinancing options without obligation.
Once you are in arrears, this negatively affects your risk profile: the corresponding ZEK entry can make refinancing or taking out a new loan difficult or impossible.
Late payments in general have an adverse impact on your credit-history. What is less well known: a special repayment agreement can also lead to the same ZEK entry 04 as a payment delay. This entry remains visible for three years. The ZEK publishes retention periods for entries on its website.
Several loans can be merged into a single contract by refinancing. In this case, too, you will receive a new loan offer for the combined sum, including annual percentage rate and term.
This improves oversight, as only one monthly instalment is due. Whether replacing or combining loans is worthwhile depends on the outstanding amounts and their interest rates. After market interest rates rose from 2023, it became necessary to assess individually whether replacing a loan would actually deliver savings. Now that rates have returned to 2022 levels as of January 2026, replacing a loan can again be financially worthwhile – particularly for loans taken out during the high-rate period, but also in some cases for earlier loans.
When refinancing, conditions including the interest rate are renegotiated. If cheaper offers are available for your profile, refinancing can lead to savings. In addition to lower rates with other providers, changes in your profile may also improve your chances. If you have repaid your existing loan regularly, the ZEK records these positive payment experiences, which can work in your favour for a new loan.
Interest costs on credit and store cards are often underestimated, but they can be significant. While the current maximum interest rate for loans is 10%, credit and customer cards are capped at 12%. As credit cards are structurally more expensive than loans, replacing such liabilities with a loan can be financially worthwhile regardless of the interest-rate environment, depending on individual circumstances.
Customer cards tend to go unnoticed, although legally they are often the same type of financing as a credit card. Especially if there are higher or multiple balances on such cards, refinancing them with a loan can offer real savings potential.
There are reasons for refinancing beyond «improving interest rates». For example, the wish to increase an existing loan may also lead to refinancing.
Just as your profile changes over time, lenders also adjust their approval criteria and offers. When refinancing, the borrower’s profile and financial situation are reassessed. Our service is therefore useful here too: approval in a previous loan application does not guarantee approval in a new one.
Depending on the situation, switching to another lender may be desirable or even required in order to obtain a new loan.
The most common reason for refinancing is to obtain a better interest rate. Other key reasons include increasing the loan amount, extending the term to reduce the monthly instalment, or consolidating several loans.
By law, there is no limit to the number of loans, provided you can afford the monthly instalments according to the credit capacity check. Managing multiple loans, however, is administratively burdensome. Larger loan amounts also tend to benefit from better conditions, which speaks for consolidation. Certain lenders require existing loans to be refinanced before granting a new one. Frequent changes, like parallel applications, usually harm your chances of approval and may even lead to rejection.
Your personal profile changes over time. Regardless of the reason, each loan application involves a fresh review of your profile and financial situation. Changes in your employment, income, marital status or other socio-demographic factors can affect loan approval.
If you have optional residual debt or instalment insurance, it is usually tied to the loan agreement. When a loan is refinanced into a new contract, the insurance cover ends and must be taken out again. Payment protection only begins after a so-called waiting period, so cover is interrupted when refinancing. Find out more under residual debt and payment protection insurance.
Yes, your new loan application may be rejected. Applications, rejections and repayment information are reported to the ZEK. A rejection is visible to all lenders in the ZEK database for two years. This does not prevent you from taking out a loan later, but past approval does not guarantee a new application will be accepted. A rejection does not affect your current loan.
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Loan illustration
Loan amount of CHF 25'000. Effective annual interest rate of 1) 4.9% to 2) 9.95%. Over 36 months, this generates interest or costs of 1) CHF 1'890.36 to 2) CHF 3'839.39 and a monthly instalment of 1) CHF 746.95 to 2) CHF 801.09.
Swiss Lenders offer terms from 6 to 120 months.
