German lenders are increasingly offering flexible repayment terms on personal loans, including the option to temporarily pause payments, according to Max Herbst, founder and CEO of FMH-Finanzberatung. This shift reflects a growing recognition among banks that facilitating continued repayment, even with adjusted schedules, is preferable to loan defaults and subsequent collection efforts.
“The flexibility of installment loans has improved significantly in recent years,” Herbst stated. “This includes the possibility of regularly or occasionally taking a payment break when money is tight.” He explained that banks are, contrary to popular belief, more inclined to operate with borrowers to maintain repayment streams than to initiate default proceedings.
The trend towards greater flexibility comes as a significant number of Germans are facing financial strain. A recent survey by the financial portal Smava revealed that nearly one in nine adults in Germany started the latest year with an overdrawn account, with a third of those owing more than €2,000. Disposing of funds can carry high interest rates, averaging 11.3 percent, making a personal loan a more attractive option for many.
FMH-Finanzberatung has been tracking the evolution of loan flexibility, and in February 2026, the firm announced the winners of its 18th FMH Award, recognizing lenders offering the most favorable terms. The firm also released a comparative analysis of flexible installment loans for WirtschaftsWoche, evaluating not only the best available interest rates for borrowers with strong credit, but also the rates offered to two-thirds of customers, as well as features like payment holidays and free partial repayment options.
The BB Bank, Deutsche Skatbank, Norisbank, and Targobank were all awarded a “very excellent” rating in the FMH-Finanzberatung assessment. The BB Bank currently offers an annual interest rate of 4.99 percent for both borrowers with excellent credit and those falling into the two-thirds customer bracket, with the option to suspend two payments per year. The Deutsche Skatbank offers a slightly lower rate of 3.87 percent for the best credit scores, but 5.33 percent for two-thirds of customers.
According to Herbst, the increasing emphasis on credit scoring is changing the landscape of loan offerings. He noted on LinkedIn that it is becoming increasingly hard for FMH to create interest rate comparisons based solely on credit-independent rates, as banks increasingly price loans based on individual creditworthiness. “You can advertise with the interest rates for the best creditworthiness and ultimately almost demand what you want,” Herbst wrote. He observed that many customers prioritize simply obtaining a loan and knowing the monthly rate, rather than actively seeking the lowest possible interest rate.
The FMH-Finanzberatung’s analysis also highlighted the growing trend of bonitätsabhängige Zinsen (credit-dependent interest rates), a development that Herbst expressed concern about, citing its potential impact on transparency and fair comparison shopping for consumers. The firm continues to offer comparisons that account for different credit ratings, but acknowledges the increasing difficulty in obtaining comprehensive, credit-independent data.
