Struggling with multiple consumer or home loans? The repurchase of credit is a current financial operation, which very often avoids the borrower to pass from a situation of excessive indebtedness to a situation of over-indebtedness. It is sort of the last chance solution. But to pay off debts without running the risk of making matters worse, you still need to be able to take advantage of the best loan repayment rate. We will guide you in this direction.
Why redeem your credits?
Before finding out how to find the best credit repurchase rate, let’s look at the merits of such a transaction. First of all, by having their various loans redeemed, the borrower benefits from an extension in terms of repayment duration. This has the effect of drastically reducing the amount of his monthly payments, and thus, reducing his debt ratio. The monthly payments once paid by the borrower for his debts actually take the form of a single monthly payment, since his loans are grouped into one.
This brings us to the second advantage in carrying out a credit consolidation transaction: the borrower only has to deal with one and the same bank (the one that granted him the loan buy-back). However, it should be borne in mind that, as a general rule, a loan repurchase generates a higher total cost of credit since the loans are repaid over a longer period (higher APR).
Note: purchase of consumer or real estate credit
Two forms of credit consolidation exist. On the one hand, there is the consumer credit grouping, for which only consumer loans are bought back. And on the other hand, the grouping of mortgage loans, which consists of buying back two types of credits: consumer credit on the one hand, and mortgage loan on the other hand (there may be one or more of each).
Redeeming credit at the best rate: the steps to follow
Regardless of the form of credit repurchase (consumer or real estate), the process for finding the best credit repurchase rate is the same. Here are the three main steps.
1. Aim for a fixed-rate credit buy-back
The best loan group is first of all the one with a fixed rate. Unlike the repurchase of variable rate credit, the borrower here knows the total amount of the repurchase, and the monthly payments are constant throughout the duration of repayment.
2. Compare credit consolidation offers
Redeem your credits, yes, but never without taking the time to study what each bank offers! As such, an online simulation tool will be of great help. It will allow the borrower to highlight the APR applied from one bank to another, and thus, to choose the best. The APR (annual effective annual rate) represents the total amount of the credit. It includes all of the latter’s costs (nominal rate, application fees, insurance, etc.). A credit buyout simulation is done online in a few minutes. In particular, you just need to fill in:
- the types of credits to be bought back (consumer loans only or consumer credit (s) + real estate loan (s);
- the amount of your monthly payments;
- the total amount that you still have to pay in respect of your credits (capital remaining due);
- your possible cash needs (additional loan to be grafted on the credit repurchase);
- the value of your property (if you are an owner) or the amount of your rent (if you are a tenant);
- your professional status (manager, craftsman, civil servant, liberal profession, etc.);
- the amount of your monthly income;
- your age ;
- your marital status (married, divorced, civil union, etc.);
- the number of children you have.
From the data entered, the results of your simulation will then be communicated to you by e-mail. You will normally see on one side the amount of your current monthly payments (that is to say those relating to your different credits), and on the other the single monthly payment after redemption. Do not hesitate to perform another simulation by modulating the repayment duration, because the longer it becomes, the higher the total cost of the credit repurchase.
3. Play the insurance delegation
Last step to find a buyout of credit at the best rate: use your right to the delegation of insurance. It is a freedom offered to the borrower since the Lagarde law. The delegation of insurance consists in taking out insurance other than that offered by the bank buying the credits. This can significantly lower the total cost of your credit repurchase.
How to build my credit repurchase file?
Finding the best loan repurchase rate is one thing, it is quite another to build the file relating to this operation. A credit consolidation file must be complete and well put together. And one, it avoids wasting precious time, and two, it proves the seriousness of the borrower with the bank. This famous file must include a whole range of documents relating to:
- to the borrower’s marital status and family situation (identity card, family booklet, marriage contract or PACS agreement, proof of address, etc.);
- the borrower’s financial situation (last 3 bank statements, tax or non-tax notice for the last 2 years or annual pension statement, etc.);
- the borrower’s professional situation (last 3 payslips or employment contract (s) if recent hiring or temporary assignment (s));
- the assets of the borrower (property deed, latest property tax notice, latest investment statement, certificate of the value of the property …);
- to debts to be grouped together (amortization table for all outstanding loans, unpaid invoices, tax arrears, etc.).
To put the odds on his side and better negotiate his repurchase of credit with the bank, the borrower has therefore every interest to be well organized in his papers!
Credit buy-back: a possible solution in the event of a high debt ratio?
When a borrower requests to buy back credit, the bank carefully examines his situation. Just as would be the case for a conventional loan application. This inevitably goes through the debt ratio that would be hers after redemption. But not only ! The bank will also assess the creditworthiness of the borrower, his professional stability or even his career prospects, the state of his accounts, or even the fact that he owns real estate. These are all guarantees for the bank. For example, in the event of default by the borrower, the property may be seized. The more collateral the borrower has, the greater the chance that the loan will be accepted by the bank.
Good to know: allegedly acceptable debt ratio
The norm is that a tenant does not exceed 33% of debt ratio once his loans are combined. However, this rate may be higher depending on its situation. For an owner, the debt ratio can go up to 50%, provided that his remaining living is sufficient.
Borrowers looking for the best loan repurchase rate to end your consumer or real estate loans at exorbitant cost, look no further! By distributing only one type of credit (the amortizable loan at fixed rate), We defy all competition. Besides, it’s hard to find a cheaper loan below 3,000 dollars! For any credit request, we study the borrower’s situation to ensure its repayment capacity. Objective: not to further endanger him financially. Curious to know what would be the amount of your monthly payments with us? Take a few minutes to use our free simulation tool and be on the move!