The redemption of credits is a solution that allows you to collect all your credits in one. Convenient and interesting for many homes that are experiencing financial difficulties or want to optimize their loans.
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What is the redemption of credits?
Credit redemption is a form of credit that consists of collecting multiple loans in repayment into one. In other words, you repay your various loans in one monthly payment. Granted by a bank or a lending institution, the purchase of credits has the advantage of allowing an individual or a professional to spread out its debt in order to better repay it and thus reduce its monthly payments; In addition, a single payment simplifies the management of bank transfers and reduces the cost of file fees. With a single referent, the borrower can manage the monitoring of his accounts in a simpler and clearer way; Households who have difficulty repaying their loans find a certain interest in this operation.
Everyone can subscribe to a loan buyback agreement; it represents concrete help for people in financial difficulty and it avoids being stuck as a bank binder with the Good bank.
In short, what is the point of buying back credits?
- Consolidate credits: instead of repaying several loans from several different organizations, you pay only one monthly payment and you only have one contact. This practical advantage makes it easier to track your finances.
- Reduce your monthly payments: the redemption of credits gives you the opportunity to pay the same amount by repaying it more quickly, or, in case of difficulty to make ends meet, to pay lower monthly payments, but over a longer period. long. Thus, this advantage allows you to live a little more comfortably each month by reducing the share of your payments.
- To reduce the debt ratio: general, your debt ratio (the share of your mandatory expenses compared to that of your income) must not exceed 33%. The redemption of credits can allow you to reduce it and thus facilitate your actions with your bank. Thus, this advantage allows you to benefit from a new loan in case of a hard blow or a quick need for a vehicle or work.
The different types of credit redemption
The purchase of real estate loans
Opting for a mortgage buyout can be particularly advantageous when interest rates on loans, which fluctuate continuously, are lower than the rate charged when the loan was contracted. The borrower can thus benefit from a reduction of his credit, in cost and duration.
The repurchase of real estate loans also makes it possible to lighten the monthly payments under certain conditions:
- If the interest rate is at least one point lower than the original interest rate in the first third of the credit repayment.
- If the interest rate is at least two points lower than the original interest rate for the remaining two-thirds of the credit repayment.
In the case of a redemption of credits, the repayment period for new monthly payments is between 5 and 30 years.
The purchase of car loans
This type of credit, purchased from the bank, a specialized credit agency or directly from the car dealership, may apply to a new vehicle or used vehicle without distinction.
The borrower gathers all the terms and conditions in one loan payment, for a lower amount since it is extended over the duration.
In addition, the purchase of car loans presents a significant non-negligible point. In fact, if the borrower’s vehicle is stolen or damaged, the amount reimbursed by the insurer can help pay back the credit.
The purchase of consumer loans
A purchase of consumer credit includes all forms of consumer credit: auto credit, revolving or restricted credit, personal credit, etc. The borrower can ask the bank or a lending institution to collect all or several of its credits in one, regardless of their form and terms.
This type of credit is interesting for households that accumulate several loans, even for small amounts. Indeed, the body buys all its credits and proposes to him a global rate after redemption which can be up to three times lower than those practiced by revolving credits.
The redemption of over-indebtedness loans
If you have difficulty repaying your credits and your loan redemption requests have been refused by several banks and lending institutions, you can apply for the redemption of over-indebtedness from the Over-Indebtedness Commission. This procedure is free and allows you to benefit from a solution from the Good bank to avoid the risk of over-indebtedness.
Credit redemption: how is it going?
To redeem credits, you can approach your bank, other banks and / or credit agencies; Be careful, however, nothing guarantees you to benefit from attractive rates. Feel free to use online comparators, you will discover offers agencies and banks online, often more attractive and interesting. Know that each lender is free to apply the interest rates he wants.
To redeem credits, you will need to submit the following documents to your lender, regardless of its nature:
- Your civil status
- A complete statement of your income, with your last three payslips, your employment contract, your tax bill, etc.
- The complete status of your ancillary charges and monthly and annual invoices
- Your debt ratio, the calculation of which should not exceed 33% of your income
- Your real estate heritage and your eventual purchase.
Any lender, bank or credit institution must know your financial situation before granting you a purchase of credits.
The redemption of credits, why not! But at what cost ?
While the redemption of credits can be very beneficial for households with moderate incomes or who are experiencing financial difficulties, some factors may add costs to monthly payments:
- Addition of a disability death insurance type credit insurance
- The fees of the bank, loan agency or broker
- The addition of a bank guarantee
In addition, if monthly payments are lightened and spread over a longer period, the final amount reimbursed will be greater than the initial amount. Moreover, the rate can be fixed or variable. Fixed, it allows the borrower to pay the same monthly payments throughout the term of the loan, but it will not take advantage of market declines. Variable, it fluctuates with changes in the market, but the monthly payments are uncertain. It is therefore important to think carefully before choosing the best solution.
Be aware that any bank or lending institution from which you are requesting credit redemption is likely to ask you to complete a health questionnaire, any medical risk that may increase the amount of monthly payments. On the other hand, it is almost impossible to buy back credit after 75 years because of the same risks.
In conclusion, the redemption of credits is not always interesting. In some situations, it is better to keep your contracts, especially when rates are lower. In addition, if you pay less monthly, you will also have to pay more. In addition, subscribing to certain credits allows you to take advantage of certain tax benefits, which you would lose by purchasing credits. In short, the redemption of credits is reflected and calculated according to each situation and each need.