The repurchase of credit represents the ideal solution when a borrower begins to have difficulty repaying his current loans. Thanks to this bank offer, he reduces the amount of his monthly payments while having the possibility of obtaining additional cash which will allow him to finance renovation work in the house.
Practice born in Anglo-Saxon countries and appeared in France in the 80s, the repurchase of credit is an operation by which a creditor undertakes to buy back all the outstanding debts of a borrower in order to unite them under a only credit with a single rate and a single monthly payment. This system was set up to help households who fear a situation of over-indebtedness. A particularity of the repurchase of credit is that all types of loans are eligible, whether mortgages or consumer loans.
The difference will mainly relate to the level of legislation. If the share of mortgages to be repurchased is greater than 60%, the mortgage loan regulations are applied. On the other hand, if it is the share of outstanding consumer loans that exceeds 60%, the operation is then governed by the Consumer Code. Thanks to this grouping of debts, the borrower can reduce the cost of his monthly payments by up to 60%. This improves the savings capacity and gives the possibility of financing new projects. Indeed, by reducing the debt ratio, the repurchase of credit offers the opportunity to have sufficient means to have additional cash that can be allocated to the purchase of a good or a service.
When buying back credit, the borrower can negotiate an additional envelope which is to be repaid with the rest of the loan. This cash can take two forms. It is a question of a cash free of use if the borrower cannot or does not want to present proof of use of the funds. The amount obtained can then serve as security savings, extra cash or can be used to finance a personal project. The cash can also be allocated to a specific project for renovation work in the house or the purchase of a new car.
In this context, it is imperative to present an invoice before the amount can be released by the bank. The advantage of this allocated cash is that it provides a better interest rate. The advantage of obtaining this additional envelope is that it avoids having to subscribe to another loan in addition to the redemption already in progress. Please note that the amount cannot exceed 15% of the total cost of the loan consolidation.
All borrowers can in principle request a repurchase of credit with additional cash intended to finance work subject to obtaining the agreement of the bank. The decision of the establishment depends on the financial capacity of the subscriber as well as his guarantees. The first element to be analyzed concerns the debt ratio, which must not exceed one third of income.
Before embarking on a repurchase of credit, it is therefore advisable to make a simulation to know if one is really able to bear this additional financial burden. There are many tools on the internet that allow you to perform this simulation for free and without obligation. Failing that, it is also possible to go through the services of a loan repurchase broker who offers tailor-made support during all the steps. He uses his negotiating strength to help his client obtain cash at an attractive interest rate.
