Struggling with a difficult end of the month, thinking about buying back credit? This operation can indeed allow you to restore the situation and get out of your financial worries. To obtain loan consolidation studies and find the best deals, the use of a credit buyout comparator is often advised. Most online credit organizations – if not all – also offer a simulation tool. This allows you to make comparisons very simply and very quickly.
Why buy back credit?
Also known as a credit consolidation or debt restructuring, the repurchase of credit consists in joining together several loans in progress in a single credit. The objective for the borrower is to reduce his monthly payments. The latter thus gains in purchasing power and has the possibility, for example, to save or finance other projects that are close to his heart. As with any loan, borrower insurance is optional here.
A credit consolidation is appropriate in two cases:
- when the borrower begins to experience financial difficulties: he will avoid a potential situation of over-indebtedness and, in fact, registration with the FICP (file of incidents of repayment of loans to individuals). Because it should be known, any over-indebted person registered on this file can no longer either take out a loan or make a credit repurchase;
- when the economic situation allows: in other words, when there is a fall in interest rates.
If a repurchase of credit allows the borrower to lower the amount repaid each month in respect of his debt, it implies on the other hand an increase in the total cost of credit. This for a simple reason: the repayment term of the loan is extended. However, this duration determines the APR (annual effective annual rate) which will be applied. The longer it is, the higher the APR.
Good to know: some borrowers from the opposite
The repayment tenure is fixed according to the financial situation of the borrower. Thus, when they carry out a credit consolidation, some borrowers have the possibility of shortening the repayment period, and therefore significantly reducing their borrowing rate.
I have loans of a different nature: how does the loan buy-back work in such a case?
There are several types of credit consolidation, each one suited to a particular situation.
- The purchase of consumer credit: it concerns any type of consumer credit (affected or not affected), such as car credit, revolving credit, bank overdraft or tax debts.
- The repurchase of mortgage: it applies exclusively to mortgage loans.
- The repurchase of mixed credit: it includes mortgage and consumer credit (s).
Whether you use a credit institution, a banking establishment or a credit buyback comparator, your credit consolidation file will therefore be treated in the same way on this point.
Note: beware of confusion
Redemption of mortgage and renegotiation of mortgage are two different concepts that should not be confused. The first means a repurchase of your debts by a competing establishment, the second a renegotiation with the organization which granted you the loan.
What is a credit buyback comparator?
Credit consolidation can be carried out with different establishments. The borrower can appeal:
- to a banking organization;
- to an organization specializing in credit;
- but also to a credit repurchase broker.
However, credit repurchase comparator and broker form a single entity. Intermediary in banking operations (BIO), this professional is independent of banks and credit institutions. Its role is to study your credit consolidation file, then to put in competition for you organizations specialized in this financial operation.
The loan repurchase broker has a whole professional network around him. This is what allows it to find particularly attractive rates. Much more than if you applied for it yourself.