Redemption of consumer credits: instructions for use
The advantage of buying consumer credit is to allow you to rebalance your finances, reduce your monthly payments and even free up cash to finance a new personal project.
It may involve carrying out work in their accommodation, going on a trip or financing the purchase of a vehicle. Redeeming consumer loans is an interesting solution when monthly payments are increasing or when one’s personal, professional or financial situation changes.
Which receivables can be grouped together in a buyout of consumer loans? How does the consolidation of consumer loans work? What are its advantages and disadvantages ? Whether you are currently in a fragile financial situation or simply wanting to save money to regain purchasing power, here are all the answers to your questions.
Why buy consumer credit?
The purchase of consumer loans offers a multitude of opportunities:
- finance a new personal project;
- reduce the amount of monthly repayment installments to regain room for maneuver or to rebalance a situation that has changed since the last consumer credit was taken out;
- coping with life changes such as birth, bereavement, moving, retirement, stay abroad, etc.
The advantage of buying consumer loans is to get a single loan, sometimes at a more advantageous rate, which gives you better visibility into managing your finances. The duration of the new loan can be adjusted (lengthened or shortened), which implies a good evaluation of the overall cost of this loan. To properly understand the challenges of buying consumer credit, carrying out a simulation is highly recommended.
What is the current rate for buying consumer credit?
Many factors come into play in determining an interest rate. The borrower’s profile, his debt capacity, his personal situation, the nature of the debts redeemed and the duration of the credit are all criteria that make it possible to set the rate applied to a consumer loan repurchase.
In general, the current interest rates on loan buy-backs are comparable to those on personal loans, ie between 4% and 10%. The range is wide, hence the advantage of using online simulators and filing several requests for credit repurchases.
Can we renegotiate a consumer credit buyout?
Renegotiating the rate of a consumer loan is legally impossible. Unlike a home loan, a personal loan, whether affected or not, cannot be renegotiated. But be careful not to confuse renegotiation and redemption of credits!
A renegotiation involves asking your bank to reconsider the downward interest rate. A buyout, or a combination, requires the intervention of an external credit organization. The latter will refinance the debts and reimburse the original lender.
It is the ideal alternative for any borrower who wishes to save money, group monthly payments or extend the duration of repayment of consumer loans.
Redemption of consumer loans and over-indebtedness
Individuals in situation of over-indebtedness are filed with the FICP (National File of Credit Repayment Incidents for Individuals). This file is accessible to all banks. They request it almost systematically when a credit request reaches them.
If this interrogation has only information value legally, it is still very difficult to obtain credit from a bank when you are on file. If you are in a situation of over-indebtedness, going to a broker or a specialized organization is recommended.
How to simulate the purchase of consumer credits?
Do you think that simulating the purchase of consumer loans is long and tedious? That it is mandatory to make an appointment with a bank advisor? In just a few minutes you can get a first proposal thanks to online simulators. Quick and practical, these tools allow you to make several scenarios by modulating the loan amount and its duration.
How to find the cheapest consumer credit buy-back?
In order to find the best conditions for buying back consumer loans, requesting the study of your file with several organizations is essential. It is possible to contact a broker, banks, specialized credit organizations, etc.
Please note: do not focus on the only nominal interest rate offered. Indeed, to find the best rate when buying consumer credit, the TEG (Global Effective Rate) is a much better indicator. This includes all of the costs linked to the credit (interest rate, insurance, administration fees, etc.).
How to optimize your request to buy consumer credit?
To put the odds on its side when requesting the purchase of consumer loans, several tips are to be followed:
- provide all the documents necessary for studying the file (contracts and loan amortization schedules, proof of income and borrower charges, etc.);
- make a realistic request by calculating beforehand its debt capacity (debt ratio and remaining to live);
- file an identical request with several organizations to obtain comparable proposals;
- if difficulties have appeared in the last few months, explain them and show the solutions found.
What are the conditions for buying back consumer loans?
To obtain a debt restructuring offer, the borrower must first judge the feasibility of the transaction. Before simulating a loan buy-back, the following conditions should ideally be met:
- have at least one or more personal loans in progress, such as a car loan and revolving credit;
- want to combine consumer loans whose total does not exceed $ 75,000 (maximum amount of a loan repurchase);
- display a debt ratio after redemption of consumer credit below the threshold of 33% (note, this threshold remains indicative and varies according to the profile of the borrower).
What documents to provide for a consumer credit buyout?
Various documents are to be provided as part of a consumer loan buyout. The main ones are:
- a valid identity document;
- proof of address of a large biller less than 3 months old;
- a copy of the latest statements (1 to 3 depending on the institution) of all the personal accounts of the borrowers;
- a copy of the contracts and / or amortization tables for the loan bought back;
- proof of income: pay slips for employees, accounting for the self-employed, pension slips for retirees, etc.
Which claims are eligible for the purchase of consumer loans?
The main consumer loans that can be part of a loan buyback operation are as follows:
- personal loans : these are consumer credits that are not specifically allocated to a project and that can be repaid up to a maximum of 7 years. Included in this category:
- revolving credit (or revolving credit), contracted for a year renewable on anniversary date, which acts as a reserve of available money, freely usable and refillable,
- rental with purchase option (LOA or leasing) which is a solution for purchasing a vehicle which is first rented to the subscriber, the latter having the choice or not to become the owner when the contract expires,
- the authorized overdraft considered as consumer credit,
- the student loan dedicated to borrowers between the ages of 18 and 25,
- personal microloans granted up to $ 5,000 for people who are excluded from access to traditional consumer credit;
- allocated credits : these are consumer credits which are intended to finance a transaction previously determined with the lending organization such as:
- auto / motorcycle credit for the purchase of new, second-hand or used vehicles,
- boat credit for the purchase of a boat, a sailboat, a pleasure boat or a jet ski,
- the works credit for the financing of renovation, repair or fitting out work in a dwelling. If the invoice is less than$ 75,000, the consumer can opt for a personal loan.
The purchase of consumer credit can also include personal debts (rental delays, unpaid debts, etc.). However, it cannot include professional tax debts.
Please note, customers who multiply consumer loans, especially revolving loans, see their request for consolidation of consumer loans rejected by financial organizations.
Why ? Because their profile is considered too unstable and therefore unacceptable. It will then require the subscriber to prove that the multiplication of revolving credits does not characterize a behavior of compulsive buyer. This attitude is indeed likely to be a reason for refusal on the part of lending organizations.
Who to contact to buy consumer loans at the best rate?
To consolidate consumer loans, the customer has the choice of turning to a banking establishment, a specialized financial company or an intermediary operating as a broker in credit consolidation.
The bank is generally the first point of contact when applying for credit. Redeeming and consolidating debts is entirely possible. However, it may be worthwhile to get proposals from other funding agencies. Specialized credit companies are more flexible in their award criteria. They are also more risk-prone than their parent company, but their loan rate offers are often less favorable.
Broker in redemption of consumer credits
Another player in the purchase of consumer loans: the broker who acts under the status of intermediaries in banking operations. Online broker or professional working in a brokerage agency, their activity is supervised by the Organization for the single register of insurance, banking and finance intermediaries, the Financial Markets Authority and the Supervisory Authority prudential and resolution.
The role of a consumer loan buyout broker is to find the best rate for your loan buyout. Its service consists in studying the feasibility of the credit buy-back request, participating in the preparation of the file and submitting this file to the banks and credit organizations for which it has been mandated. The intermediary receives mandate fees payable only upon signature of the credit repurchase.
Can I buy consumer credit if I am on file at the Best Bank?
It is more difficult to redeem credits when a file appears. The borrower must ensure that he is not on file with the Best Bank, or the Central Check File or the National Personal Credit Repayment Incident File (FICP) to increase his chances of obtaining a loan. ready. If this information is only indicative, it very often dissuades lenders from granting a request.
For people in a degraded financial situation, other guarantees can be claimed as in the context of the assignment on salary. The lending institution deducts the amount of the reimbursement directly from the salary of the creditor.
Is there an age limit for buying back consumer loans?
Age is not a criterion that stands as an insurmountable obstacle to access to the grouping of personal loans. To determine the maximum age for grouping credits, it can however be noted that the last repayment deadline must be made before the 84 th birthday of the borrower, date to which we add 6 months. It all depends on the duration of the consumer credit buyout.
What are the deadlines for buying back consumer loans?
The legal deadlines for a credit buy-back punctuate the stages going from the filing of a file to the signing of the offer to buy back consumer credit:
- several days on average between the submission of the file and a first response from the lender to find out the feasibility of the operation;
- ten days between the first response and the time taken to examine the loan consolidation file, with an agreement as the key;
- 8 to 10 days delay of reflection between the notification of the offer and the decision of the borrower;
- 14 days of withdrawal period for the borrower after the signing of the consumer credit buy-back offer, which corresponds to the time required to release the funds.
These deadlines mentioned for information purposes indicate that the borrower must wait up to 3 weeks to be able to enjoy the funds, hence the advantage of anticipating this period in relation to the personal project to be carried out.
Is borrower insurance compulsory for a purchase of consumer loans?
The purchase of consumer credit is not necessarily backed by the purchase of credit insurance. Depending on the amount of the loan and his personal situation, opting to take out borrower insurance makes it possible to protect oneself in the event of the unexpected (work accident, disability, etc.) or to protect one’s family in the event of death.
However, if it is required from the lender, one must be attentive to its cost, linked to various elements that define the profile of the borrower. Before embarking on this operation, you must therefore ensure that you make a comparison of consumer credit buy-back with or without borrower insurance.