Why buy back a loan?
The main advantage is to benefit from the reduced interest rate, various components of your credit are then modified. You can choose: either keep the same duration and reduce the amount of monthly payments, or keep the same monthly payments and it is the duration of the loan that is reduced (sometimes by several years).
You have to decide in the first half of the loan because afterwards, the interest part to be repaid is much lower and it is therefore no longer appropriate to review your credit. In addition, as you will have to renegotiate this credit with your bank or with a new financial partner, this will generate new costs: compensation due due to the early repayment of the old credit as well as new processing fees. It is absolutely necessary to request a credit simulation to assess whether it is worth it depending on the amount of the credit redemption you want to make. But be careful, the banker may refuse the buyout or ask you to prove to him that you have found a better offer elsewhere and then, perhaps, he will make a gesture in your favor. Turning to online credit redemption offers seems like a better idea to find a proposal that matches your situation. Application fees are practically non-existent and the granting conditions less demanding.
Things to know about a loan buyback
A credit buyback allows you to collect all your debts in a single contract. Its amount is equal to the sum of the loans that you have not yet repaid as well as the interest rate.
The duration of a repurchase of credit is the period proposed for the restitution of debts. If it is a consumer loan, it is set at 10 years maximum. It can be up to 30 years for a mortgage loan.
The repurchase of credit is intended for those who face a situation of over-indebtedness and its in the incapacity to restore correctly its loans. To benefit from this formula, you must be subject to at least two loans.
There are two variants of credit redemption. The first is the consumer loan consolidation. The second is to combine a mortgage with other debts, like a personal loan.
Three most common questions about credit redemption
What rate for a credit redemption?
The repurchase of credit makes it possible to remedy a situation of over-indebtedness. With this formula, you will be able to considerably reduce your monthly payments, in particular by extending the repayment period. By the way, this type of offer comes at a cost. Note that the average rate of a consumer loan repurchase is around 2.6%, while that of a mortgage is around 1.43%.
Which organization to go to for a credit buyback?
Credit buyback, also called restructuring, offers people in over-indebtedness the opportunity to collect the sums they owe in a single contract. There are many establishments offering this kind of formula. They include branches of large national banks. Otherwise, there are also credit redemption organizations that specialize especially in consumer loans.
How to properly negotiate your credit buyback?
A solution dedicated to people affected by a situation of over-indebtedness, the repurchase of credit is a very practical offer. Before subscribing to it, you must negotiate the terms and conditions of the plan. You will then have to take into account multiple parameters. In particular, you will need to know how to ask the loan institution for an advantageous interest rate as well as a repayment period adapted to your case.
Difference between credit redemption and credit consolidation
The repurchase of credit and the consolidation of credit are alike but they are not quite the same thing! Credit consolidation is a situation where you have multiple personal loans from different companies or stores. Managing multiple monthly payments on various dates can be a problem for some people. In addition, it can cause financial difficulties that could lead to default. To avoid this and bring serenity to the consumer, the consolidation of credits is an excellent opportunity to clean up their finances. It is a question of bringing together all the loans and debts in progress, in a single loan, and to take advantage of a new rate.
This will certainly be more favorable but not necessarily. The main advantage is that it allows you to have only one monthly payment to repay, which can be reduced especially if you increase the repayment period. Very useful in case of temporary financial difficulties. When consolidating your loans, take into account that you will have to pay compensation for each loan repaid early.
Have your situation and profile analyzed to find out if this is a real advantage for your balanced budget. It's free from most online credit sites using their credit calculator.