A credit redemption is a mechanism that allows you to improve the terms of your current credit, the interest rate, the repayment term and the monthly payments you have to make. It can relate to a single credit as it can relate to a loan package. This article gives you all the information you need to understand the process.
Credit buyback, between credit recovery and credit consolidation
The first scheme is for an institution to pay your debts to your bank in order to resume the credit in progress. Whether with a mortgage or a personal loan (or even business debts), the institution anticipates the repayment of your credit to take the place of your creditor. He will propose a new credit agreement, with a new interest rate, a new term that involves new monthly payments.
The second scheme is a credit pool. The buyer pays all your credits, whatever their nature, to offer you a new single credit agreement, with a single rate, a single monthly payment. It’s the grouping of credit. This system avoids you over-indebtedness in addition to making you benefit from a lighter interest rate. In some cases, it is even possible for you to consider new loans to improve your daily life.
When to redeem credit?
The decision to redeem depends on several circumstances. The first criterion that you can decide to realize the redemption is the interest rate. When another institution offers a cheaper interest rate, the transaction will be entirely beneficial (the gain is a few thousand euros with a credit of 60,000 to 100,000 €).
Your debt ratio is the second criterion to promote a buyback credit. This rate is usually set at 33% of your income. By pooling your credits, you can significantly reduce your repayments by spreading them over time to bring your debt back to a more sustainable level. If the rate falls below the threshold, you may want to consider other commitments.
Is the repurchase of credit possible for bank records?
The answer is case by case. Everything will depend on the applicant’s situation, financial health and history. It is difficult for a bank prohibition to obtain a buy-back. Nevertheless, it is estimated that an FCC (Central Check File) person will be more likely than a FICP (Personal Loan Repayment File). The consultation of these two files is systematic for any establishment before granting a loan or a repurchase of loan. Brokers can nevertheless help you to look after your file to hope for a positive response from credit institutions.