When considering buying back credits, it is not always easy to know where to turn. Given that a redemption of credits is a sometimes complex operation, it is essential to choose the most suitable intermediary for its needs. Today, there is a multitude of players in this market and it is sometimes difficult to choose between traditional bank and specialized agency.
What is a redemption of credits?
Credit redemption is a banking operation that serves as leverage when too many credits have been contracted by a household. Indeed, sometimes having subscribed to several credits and therefore having to repay several monthly payments can quickly lead to a budgetary imbalance and weaken the financial situation of a household. The repurchase of credits makes it possible to collect all the loans in repayment by subscribing to a new credit. Therefore, the borrower has the opportunity to renegotiate the applicable interest rate down and thus reduce the amount of monthly payments to pay. In return, the repayment term will be extended.
There are two types of credit redemption: the purchase of consumer credit and the purchase of mortgage credit. In the first case, this type of redemption is available to both tenants and owners and it is possible to include in the operation the following credits:
- The personal loan
- Auto credit
- Motorcycle credit
- The credit works
- The revolving credit
On the other hand, it is also possible to include certain debts such as tax arrears, unpaid bills (electricity, internet, water, gas…), alimony to pay, rent arrears, family debts or bailiff debts.
In the case of mortgage repurchases, this is a loan buyback that includes both consumer and real estate loans. The property will serve as collateral for the new loan. The share of mortgage will have to represent 60% of the totality of the operation to obtain the best possible rate.
Criteria for choosing your credit institution
The objective of a loan buyback is primarily to allow the borrower to see more clearly in his budget and to renegotiate the terms of his credit to his advantage. This is why to choose the best bank to make a purchase of credits, it will be necessary to pay close attention to the following criteria:
- the overall employment rate (APR): this is the most important element as it will determine the cost of the buy-back. Be careful for example to choose between fixed and variable rate, because the bill can quickly climb depending on fluctuations
- the duration of repayment and the amount of the future monthly payment: it will be necessary to be vigilant concerning the amount of the monthly payment so that this one does not come to destabilize the personal finances and that it is really more interesting than the previous one. For this, it is essential to properly determine and calculate the rest to live once the monthly payment levied. This remainder corresponds to the amount that remains after an individual pays all these monthly fees (rents, taxes, monthly payments, etc.).
- The amount of insurance: if it is not mandatory, it is strongly recommended to ensure the granting of a purchase of credits. It covers risks in the event of the borrower ‘s repayment incapacity for various reasons, such as job loss, illness or death.
The different actors of the credit redemption
To redeem credits, it is possible to turn to different intermediaries. Depending on your needs, your professional situation and the nature of the credits to be bought back, the actors can vary. At present, competition in this market is tough, which is why banks and credit institutions do not hesitate to offer very attractive offers including multiple services and formulas to attract new customers.
- Banks and their subsidiary:
The major national banks have almost all offers to buy loans to their own customers and external customers. Most of them have also opened subsidiaries specifically dedicated to a credit buy-back activity. To choose among these different institutions, in addition to the rate, it may be interesting to choose a bank depending on the profession of the borrower. Indeed, depending on the latter, some banks offer specially dedicated offers (purchase of credits for civil servants, craftsmen, military, etc.). It is also important to know that it is not necessary to have opened a current account or a savings product in the chosen bank. These are constantly looking for new customers.
- Specialized organizations:
In general, it is considered that the organizations specially dedicated to the purchase of credits practice higher interest rates and that the costs are generally higher. To choose among the multitude of players in this market, it will first of all be necessary to look into the nature of the credits involved in the repurchase transaction. Indeed, some organizations are specialized in the redemption of mortgage loans while others are specialized in the purchase of consumer credit.
The role of a credit buyback broker
Another key player in the redemption of credits, the broker is intermediate, very useful when one wishes to move towards a grouping of loans. As a true expert in this field, the broker is there to give his client both strategic support to find the best offer and, above all, to accompany him throughout the steps to be taken to obtain a buyout of credits. Credit specialist, he has a wide range of partners and he can negotiate the best terms of redemption for his client. Depending on the borrower’s profile, resources and credit situation, the broker will be able to negotiate directly with the chosen institution to ensure that the redemption of credits is obtained.
Use an online simulator to make your choice
To help individual borrowers to see more clearly in the face of the multitude of offers, many comparison tools have been created. Thus, on the platforms, it is possible to use a free online simulator. Without any commitment, the applicant can obtain in a few clicks all the information relating to a future redemption offer. To do this, all he has to do is enter information such as his income, the number of credits to be redeemed, the duration and amount of the outstanding capital, the interest rate in effect and any other information relating to his financial and personal situation. Thanks to an online calculator system, the simulator generates a result that will give an idea of the future loan conditions that can be obtained. At the request of the borrower, an estimate may be forwarded. These simulators do not engage the user and are totally free. When the best offer is found and selected, it will be sufficient to send a request and to create a file.