Broker during a new credit restructuring operation: Broker in repurchase of cash credit – Consolidation of credit
The repurchase or regrouping of consumer credits is a banking operation consisting in gathering several loans in only one. The interest is based on the proposal of a new repayment plan and therefore the reduction of the monthly payments.
This debt restructuring action adapts in particular to the needs of the applicant. It is also perfectly suited to families who sometimes find themselves in an atypical situation and are looking for tailor-made solutions. The loan repurchase request can be made by the borrower to another credit institution and may encourage him to change bank.
The advantages of a grouping of consumer credits
In France, 36% of households repaying loans have children, 31% have, to be precise, between 1 and 2 children. The family budget is therefore at the heart of the functioning of most French families and consumer credit is a means of carrying out projects such as the financing of a family car or even leisure projects (holidays, trips, others).
All these credits can have an impact on the finances of a family, that is to say that the monthly payments can become heavy (after an accumulation of loans or life events, unforeseen events) and thus affect the balance between income and expenses that can make you over-indebted. By redeeming your loans, you can consolidate your credits into one loan. This allows you to postpone the repayment period and reduce the amount of the monthly payment, which then becomes unique.
This refinancing avoids risky situations such as over-indebtedness, but also makes it possible to stop the accumulation of credits, which harms the proper functioning of the family budget. This operation involves costs and the applicant must in particular respect certain prerogatives and rebalance your situation. It should also be specified that credit institutions impose eligibility criteria (maximum debt ratio, minimum residual duration remaining duration, fixed income, permanent contract or equivalent, absence of bank details, etc.).
Can buying back consumer credit borrow cash?
The pooling of your credits can therefore include an advantageous cash credit, that is to say an additional sum of money which is loaned to you to help you finance new projects. It is not a new request for credit but rather a banking operation making it possible to generate liquidity making it possible to increase your purchasing power. The amount of this cash varies according to the eligibility limit of each banking establishment.
By obtaining this grouping of loans from the financial organization that buys your debt, you will no longer have to borrow new consumer credit for your project. As this amount of credit is integrated into the rest of your consolidated loans, its repayment is included in the single credit. Loan renegotiation has two advantages: a borrowing rate calculated on all of your debts and simplified management.
Can a consumer loan buy-up afford a car or work?
Take stock of your current credits and benefit from a financial solution adapted to your situation. The grouping of credits can allow you to keep your budget under control, but also to anticipate changes in your life. To ensure its effectiveness, you can make a credit buyback simulation online before proceeding.
Renewable credit renegotiation is a financing solution that allows you to consolidate your current credits while maintaining your budget. You will no longer need to make a new loan (car loan, work credit, etc.). Credit restructuring allows debtors to adjust their debt ratio, improve their financial situation, renegotiate their loan insurance, and avoid over-indebtedness. With this type of operation, you have the possibility of:
- Finance a new project (car purchase, works, car, etc.)
- Coping with life changes (moving, birth, retirement, children’s higher education, etc.) or life accidents (death, illness, work accident, disability, etc.)
- Reduce your current monthly payments to meet new obligations (*)
(*) Reducing the amount of monthly payments implies an extension of the repayment period and a possible increase in the total cost of one or more loans subject to consolidation. When buying a consumer loan, it is important to calculate the overall effective rate, the remaining capital of the, the remaining duration, the taeg, etc.
It is possible to group under a single loan:
- Consumer credit (personal credit, revolving credit, etc.)
- One or more home loans
- A credit facility in current account with the bank.
How much does a consumer credit buy-back cost?
Before you start consolidating or buying consumer credit, it’s important to calculate the cost. Consideration must be given to the mandatory redemption and additional costs, which are sometimes less visible in the credit conditions. Here is how to calculate the total cost of purchasing services.
To determine the total amount required to repurchase or pool the credit, the prepayment charges provided for in the initial loan agreement should be included. Unlike home loans, where IRAs often represent 3% of the outstanding capital, consumer loans are often made with more favorable terms.
In most cases, the contract provides for an IRA rate of approximately 0.5% or 1% of the principal remaining due on the day of the transaction. The Consumer Law (Art. R 312-2) limits these rights to 3%.
Prepayments are part of the credit agreement and are difficult to negotiate. However, certain situations are more favorable for obtaining reductions in the IRA, in particular when consumer credit is pooled within the same financial institution as before.
In the vast majority of cases, the repurchase of credit also implies the compulsory payment of administrative fees. However, these costs only arise when the operation is actually carried out. Concretely, this means that there are no administrative fees to pay during the feasibility study of a consolidation or a credit buyout. This simple request for information is free, even from a real estate agent. Therefore, if the buyout transaction is refused, there is no charge. It is the signing of the credit buyback offer that activates the application fees.
It is possible, and even desirable, to always negotiate the cost level in advance. As a general rule, around 1% of the buy-back amount should be considered as an administrative burden. But this level is, of course, negotiable. It all depends on the quality of the borrower’s file, his negotiation skills and the willingness of the credit institution to make a commercial gesture.
When implementing a consumer credit buyout contract, the conclusion of death and disability insurance is compulsory in most cases. The same goes for consolidating credits. These contributions are often overlooked when calculating the buy-back cost, but these are additional costs that must be taken into account. The use of a borrower insurance comparator allows you to reduce the overall cost of the loan.
Another element of life and disability insurance to take into account in the cost of purchasing credits is the basis for calculating contributions. They can be calculated either on the basis of the initial amount of the credit, or on the basis of the capital remaining due after each monthly payment. In both cases, an apparently identical contribution rate will not give the same monthly contributions at all!
Calling on a credit broker can be essential to calculate the extension of the credit term, simulate the loan, determine the best credit rate, establish the amortization schedule. He is competent to carry out the loan repurchase request and to carry out the credit simulation in order to select the credit organization. To simplify the calculation, simply go through an online simulation to compare the different rates and multiple personal loan offers. An online request on a credit comparator with your bank also allows you to view