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The principle of buying back credits is relatively simple: indebted households go to an institution other than the one that originally gave them the funds. The latter balance all loans to the various creditors (whether it is real estate loans and/or consumer credit) and replace them with a new contract at a more attractive rate but a longer duration.
The benefits of pooling credits
1 The first is a significant reduction in the amount of each monthly payment compared to the sum of the grouped debts. For those who wish to implement projects, this solution also offers the possibility of additional cash.
2 Moreover, instead of dealing with several creditors, the beneficiary has only one contact person: the institution that bought back its loans. And the new contract granted means a single monthly payment, its personal financial management is greatly facilitated, with a quick check of bank statements.
3 Finally, the redemption credit is open to all persons with outstanding loans; in the case of a home loan, the solution is available to tenants and owners of their principal residence, as well as to persons hosted by a third party or lodged by their employer.
In order for these monthly payment reductions to be possible, in addition to the application of a sometimes lower rate, the repayment period is lengthened. The counterpart : the total cost of credit will increase proportionally.
Types of credit redemption
The purchase of credits is possible for almost all types of real estate and consumer loans. To be precise, are thus eligible:
- works credits,
- auto credits,
- personal loans,
- renewable credits,
- bank overdrafts,
- real estate loans in all their forms (fixed or variable rate, with or without a mortgage).
On the other hand, all professional debts are excluded, as well as delays in the settlement of URSSAF or VAT. FCC / FICP registrations can also be prohibitive.
The purchase of consumer credits
This type of loan consolidation is specifically for consumer credit, which is collected and converted into a single contract, without requiring the borrower to provide a mortgage guarantee. All consumers who have the opportunity to take out consumer loans can similarly engage in a loan buyback, without restriction.
The purchase of consumer and real estate loans
This form of restructuring consists of consolidating old loans of a different nature. Thus, with this operation, the financial institution proposes to combine in a single loan several consumer credits and one (or more) mortgage (s). It is therefore entirely possible to group consumer loans with real estate loans.
What if I want to redeem home loans?
This type of operation, the historic specialty of MineFinance, concerns only a real estate loan which is bought on more advantageous terms. In other words, a rate more attractive than that initially contracted. Unlike the two previous types of restructuring, this one is not considered as a regrouping/repurchase of several credits, since it concerns only a mortgage.
Note: the repurchase of mortgage credit should not be confused with the renegotiation of a mortgage loan! In fact, the repurchase of mortgage consists of negotiating a preferential rate with a competing institution other than the one in which the loan was granted. While the renegotiation of real estate credit involves a (re) negotiation with the lending bank.
How exactly does the pooling of credits work?
To offer a new contract that allows you to reduce the amount of your monthly payment, the financial institution begins by totaling the amounts you still owe for your outstanding debts, whether it is a mortgage, a car loan, personal loan or other consumer credit.
It then looks at your current predictable and incompressible expenses. Added to your repayments, they are deducted from your income in order to know your rest to live, your level of debt and your ability to repay.
The main criterion for accepting a loan buyback is the debt ratio. This indicator is simply calculated according to the following formula:
Formula Debt ratio = Recurring charges / Revenues
All charges are taken into account, regardless of their frequency; they include the monthly repayments of the various credits, the rent, the current expenses, the paid alimony, etc. As for income, it consists of wages, various state aids, any pensions received or income from land, etc.
After a careful analysis of these elements, the institution apprehends the financial situation as a whole, comparing, in particular, the cost of all old debts with the cost of pooling loans. This operation entails a number of costs, including the application fees, the transfer of the guarantee, etc.
In addition to the question of your finances, the search for the offer best suited to your case involves the study of your family situation (married, single, divorced, with or without dependent children) as well as your employment situation (employee, retiree, liberal profession, trader, craftsman, entrepreneur, jobseeker…).
Beware, the many traditional or 100% digital financial institutions are fighting a fierce war with very varied formulas in terms of credit redemption. To find the offer that best meets your expectations, do not jump in a hurry, take the time to compare several proposals. Traditional banks are few to offer the device, so you will have better chances from specialized organizations.
Important Tools dedicated to this task are available on the Internet, free, fast and effective. For a better accompaniment, the use of a quality intermediary, such as MineFinance, is the most judicious solution.
How to make the right choices for your purchase of credits?
Many people hesitate between renegotiating their loans and pooling credit, wondering which of the two solutions is the most interesting. The choice depends on their financial profile and their objectives, but in general, if it is to have additional cash, consolidate/buy back its loans is preferable.
However, before launching headlong, professionals recommend to be well informed and above all, to become aware of the pitfalls that exist to make an informed choice and maximize the profit from the operation.
Such an approach first requires the applicant to produce a balance sheet of his finances. The different loan contracts must be included in the file; it will probably be asked for a depreciation schedule which details the sums still due, with the breakdown, for each installment, between the capital to be repaid and the interest.
In addition, if an additional amount is requested to finance a particular project, supporting documents are required. For example, if he plans to undertake work in his home, he will have to produce some estimates of craftsmen.
A new contract is naturally accompanied by a change of borrower insurance, this guarantee is required by the lenders. And as long as you do it right and take the time to compare several formulas, there are several thousand USD of additional savings to the key. This is all the more interesting at the moment when the successive reforms (the Lagarde law in 2010 and the Hamon law in 2014) facilitate the free choice of the insurer by the borrowers.
Finally, for those who fear the extra burdens that can be caused by the redemption of credits, we must also consider the consequences of a possible failure to pay their debts : on the one hand, various financial penalties are applied; on the other hand, the administrative consequences can be very heavy, especially if it leads to the ban on banking and banking at the Banque de France or over-indebtedness.
The purchase of credits in 2019
|Net income of the borrower||$ 3,078|
|Age||39 years old|
|Average loans to buy back||3.1|
|Amount of loans to be repurchased if consumer credits only||$ 36,253|
|Amount of loans to be bought back including home loan||$ 195,585|
Due to lack of information, credit consolidation is too often associated with over-indebtedness or the stacking of revolving credits. Others warn against the pretense of an extremely high final cost. Finally, public mistrust of the practice is increasing because of the multiple cases of scams, even though there are serious sites that offer real solutions to borrowers.
However, the figures show the success of refinanced loans (excluding renegotiations of real estate loans alone), since in France, they weigh 17 billion USD. And while the redemption of credits is certainly not a miraculous solution for all cases of indebtedness, it is also far from being used exclusively to redress catastrophic situations.
Also, without falling into the opposite extreme of presenting the grouping of credits as “The Miracle Solution”, it is clear that if it is addressed to different types of clients and projects, we are really very far ahead. the average profile, the usual catastrophic snapshots.
To realize it, MineFinance reveals the average profile of the borrower who resorts to this operation. At age 39, he receives a net monthly income of $ 3,078 and holds 3.1 loans to buyback. When the debts to be bought back relate solely to consumer credit, the total amounts to $ 36,253, but it reaches $ 195,585 if a mortgage is integrated.
Contrary to popular belief, therefore, people seeking consolidation of loans from financial institutions are relatively old, have revenues well above the national average and have a limited average number of loans.
Income well above the French average, relatively advanced age and finally a reasonable number of credits, here in a few words the profile of those who access the credit pool.
It is also intended for different types of projects, mainly the purchase of the real estate, the anticipation of the decline in income due to retirement, the hazards of life (divorce, serious illness, loss of life). employment, succession, etc.) or the partial or total financing of a new project.
With the increase in the tax burden and other levies, professionals in the sector encourage French households to perform a simulation to realize the decrease in the number of monthly repayments that can give them the purchase of credits.
Often the final cost will be a little higher, but not in all cases “says expert,” but again the goal is not this one, “she adds. “It is especially a good solution for the French middle classes (…) to moderate their monthly outflows of money. “