In the case of loan restructuring or the repurchase of consumer credit, it is often said that debt consolidation reduces the loan repayment rate. Indeed, this solution will allow over-indebted households to start on a good basis at a more attractive rate with a healthier financial situation. They can also finance a new project while benefiting from an advantageous monthly payment. By extending the repayment period of their loans, they can also have financial security for themselves and their families in the event of an unforeseen event.
Why choose the consumer credit buyout solution?
In France, it has become much more popular since 2014, when many borrowers decided to buy their home loans. This loan consolidation solution is found in the current competitive rates compared to the initial rates at the time of the credit agreement. And taking into account the funding policy of the Agree bank, it is unlikely that this percentage will increase. Bidders would then have an interest in renegotiating or repaying the maturity of their loans in order to reduce their budget.
Here are the benefits of debt restructuring:
- If a family has several debts (car loan, home loan, work, consumer loan, revolving loan, personal loan, etc.) and has difficulty repaying them, it can rebalance its budget. The loan repurchase combines all its loans into one, with a single monthly payment and a single withdrawal.
- The monthly payment can be reduced to minus 60%.
- If some banks are used online, there is no need to change banks and there are no administration fees.
- A fixed APR is available.
- In the event of an incident or unforeseen event, the family can still pay their bills while paying their expenses.
- This operation avoids the FIP file or even the banking ban of the Banque de France.
However, reducing monthly payments does not mean that they must be reduced significantly. In principle, these monthly payments are adapted to the actual expenses of each household. The debt is not written off, but distributed monthly to increase purchasing power. Loans outstanding are consolidated into a new loan and this must be repaid. It is therefore important to carefully check this interest rate and the compensation necessary to constitute the file (fines for early repayment, guarantee costs, etc.) and to ensure that the solution is profitable in each individual case.
An online credit buyout is currently possible to consolidate debts or to embark on new projects. Indeed, the renegotiation of loan makes it possible to constitute an additional reserve of money with a credit institution. These financing solutions generally offer better loan terms with avoiding excessive debt. Before applying for a loan repurchase, making a credit simulation or using an online credit comparison tool to select the best financial institutions seems essential.
What is the difference between repurchasing credit, consolidating credit or restructuring debt?
These different conditions all apply to the consolidation of loans of different types or debts (taxes, personal debts, etc.). These solutions relate to existing loans which have been taken out and which must be repaid in good time. This is the difference with a conventional loan which can start from scratch. Loans are bought back by the bank or repo institution. The latter are responsible for reimbursing the remaining capital which must be paid to their creditors.
The credit organization is therefore the new lender through the consumer credit consolidation operation. This is a new one-time loan, which the borrower should now pay. To this end, it offers a lasting solution for the restructuring of its client’s loans. It is a long-term payment overhaul. One way to clean your budgets properly. This is called debt restructuring.
What is included in the calculation of income for a tenant loan buyout?
All your recurring costs are included in the calculation of income for a tenant loan buyout. This concerns the rent of your principal residence, all consumer loans, all revolving credits or credit cards with monthly repayment of the principal, maintenance payments, compensatory benefits paid, back taxes for the year and ATD, the repayment of a family loan.
Credit renegotiation or debt restructuring is not an easy operation. It generates costs that can be significant for any organization undergoing restructuring. On the other hand, it involves participants such as the real estate agent, the insurance company, the banking establishment or the financial organization, the notary…
In the event that the lender offers application fees, it is estimated at 1% of the amount of the new loan. For housing loans, prepaid expenses are calculated up to 3% of the capital to be restructured. For financing and mortgage guarantee, the notary fees can vary from 6% to 9% of the amount of the new loan.
And finally, bank intermediation fees can vary between 4% and 8% of the amount of the new loan.
What are the criteria for accepting a credit consolidation application?
The conditions for accepting a request for reimbursement depend on the borrower’s funds, creditworthiness, age, outstanding debt, guarantees and payment history. To make a loan redemption request, the credit broker can help you put together a refinancing file. The borrower can also benefit from a personalized study carried out by a brokerage company. The banking intermediary can help you submit a request for financing in line with your repayment capacity and can negotiate directly with the banking organization.
First, the borrower must be of legal age, be valid and enjoy all civil rights. Households in the divorce process, foreigners with a temporary residence permit were of course rejected. Normally, the 33% rate is respected, but some organizations can accept a debt ratio of up to 50% if the borrower is the owner. The criteria for the accepted age limit are not very strict in this regard. For consumer loans, it is 70 to 80 years.
In addition, the organizations do not accept unfinished products, wooden constructions, motorhomes, boats as a guarantee, etc. Some organizations also grant a credit repurchase to a registered or indexed person if he owns it. But if the customer is banned from banking, the possibility of a credit restructuring will be excluded.
Finally, game debtors, professional debtors and people who want to buy personal property are not entitled to this financial transaction.
For a consolidation loan application, a loan repurchase simulation may prove to be essential. It makes it possible to determine the rate of credit or the total effective rate, the lengthening of the duration, the amount of the monthly payments, the remaining duration, the total cost of the loan offer … The online loan simulator allows to quickly judge the effectiveness of a consumer loan buyout or a home loan buyout. Buying a credit cannot be improvised since it is essential to fulfill certain conditions to trigger the procedure and regularize the situation. We are therefore interested in loans to find a better credit rate for example.