When an individual or a company that has taken out several loans wants to reduce its monthly payments, the repurchase of credit is a solution. Particularly in a situation of over-indebtedness, this can help to master more a tight budget. This section is dedicated to the repurchase of credit to understand this device very useful to get out of certain impasses.
Redemption of credit: definition
The credit redemption is a financial operation that aims to gather several loans in one to better manage them. We also talk about debt restructuring or credit consolidation. So, regardless of the number of loans subscribed, it is possible to repay them in a single monthly payment and for a single duration. This avoids complex cases with multiple parameters in which the borrowers eventually get lost, and lose control.
The credit institution carrying out the operation
The repurchase of credit can be carried out by the institution from which the loans themselves were contracted. It is also possible to use a specialized bank.
In the first case, it is a renegotiation of a loan with his bank. As for the second case, it gives birth to a new contract as to the realization of a first loan. As a result, there are processing fees to be paid and possibly early repayment allowances.
Credit union: who is concerned?
The credit pool is intended not only for professionals, but also for individuals who want to improve their finances. It can relate to household debts, tax arrears and various bills.
It should be noted that if a contractor wishes to take out a personal loan buy-back (special offer), the bank can not resume its business loans.
Types of loans affected by the restructuring
In general, it is possible to restructure 4 types of debts:
- Consumer loans (revolving credit, personal loan, car loan )
- Debts related to real estate
- The debts related to the purchase / sale with repurchase.
- And, professional credits such as: leasing, bank overdraft, discount, cash facility, depreciable credit, discount, retirement preparation, etc. Even the tax and social debts of companies may be affected by the repurchase of credit.
The benefits of credit restructuring
Credit restructuring allows you to:
- benefit from a more interesting rate
- reduce the cost of monthly payments and earn additional cash or purchasing power
- decrease the cost of insurance related to loans
- have only one sample in the month
- return to a more reasonable level of debt and finance new projects
- invest in new materials
- avoid over-indebtedness
- benefit from a single interlocutor who will facilitate the subsequent steps
In addition, if the borrower wishes to make the repurchase of credit via an online bank, it is possible to make a simulation without commitment, in order to quickly know its financial situation.
The disadvantages of credit restructuring
- The duration (in number of monthly payments) that goes on. In the long run, it becomes less advantageous.
- Subscription to a new credit insurance is necessary
- Payment of additional fees is to be expected (brokerage fees, refund penalty )
- Restructuring request refused in case of excessive debt
Tight credit conditions tightened
Since the crisis of 2008, banking institutions are increasingly rigorous and selective about projects to finance. They require a good knowledge of the financial situation of the company applying for the loan. Quite simply, to know to what extent the restructuring of the debts can be put in place.
At least two criteria must be analyzed: the solvency criteria and the guarantee criteria. Generally for the professionals, the financial companies require the last 3 balance sheets of the company as well as the justifications of the loans in progress. For the guarantee, the goods (or mortgages ) are studied by the catering organization. While large companies and multinationals have financial guidelines that can shape this demand, few SMEs and small businesses can benefit from this solution.
What to do to find the best credit pooling offer
Ask a professional
In order to obtain the best credit surrender conditions, it is advisable to go to an intermediary in a banking operation or a broker. First, these professionals have a perfect knowledge of the financing arrangements. Second, they will guide the borrower towards the financial organizations likely to respond favorably to the request. At the same time, the presentation of the file will be optimized.
Play on the competition
Playing the competition is first of all going through the comparison of the different offers presented by the loan agencies. This is possible on the internet. What you need to analyze is the credit surrender rate, the amount of the redemption payments and the repayment term. Certainly, if the borrower uses a professional, he will take care of finding the favorable contract according to the financial capacity of the company.