To finance a project, it is often recommended to opt for a loan. It is an effective way to quickly release funds and repay them according to the borrower’s ability. However, managing credit is sometimes difficult to overcome for borrowers, which is the cause of over-indebtedness. The repurchase of consumer credit allows for alleviating this indebtedness by offering a solution adapted to the borrower. So, without further ado, let’s dive into this blog and learn everything you need to know about credit.
The principle of repurchase or grouping of credit
The repurchase or grouping of credit is a process that allows financing the repayment of a current loan with new credit. The management of monthly payments represents a delicate operation for the borrowers. Consequently, depending on the number of credits, the monthly payments can take a significant proportion, considerably reducing the room for maneuvering households.
The repurchase of credit makes it possible to reduce these monthly payments and to group them into only one payment to facilitate their management. We speak of consumer credit when it is a credit that is not intended to finance a real estate loan or when the borrower does not wish to integrate it into the financing of this type of loan.
The functioning of this financial operation
The repurchase of credit is capital released by a dedicated financial organization. It allows for regrouping and for financing the repayment of the current credits thanks to a unique monthly payment. The principle is mainly to simplify the management of monthly payments and reduce their rate. In this case, the beneficiary has a reduced monthly payment, thanks to a readjustment of the repayment period.
The calculation of the amount to be borrowed
In general, the repurchase of credit must make it possible to reduce the rate of indebtedness below the threshold of 33%. This is also the rate targeted by creditor organizations. To do this, the amount of the repurchase is calculated by taking into account many parameters: the borrowing capacity of the beneficiary, the capital borrowed, by considering the amount of the loans repurchased, etc. Other specifications can be added to these initial parameters:
Affected consumer credit
In this type of credit, the capital released must meet a particular need that must be mentioned in the contract. It can be for the purchase of goods or the realization of construction and renovation works.
The non-assigned consumer credit
The non-assigned consumer credit allows the release of capital that can be used according to the needs of the beneficiary. The beneficiary will not have to justify the need.
The definition of the period for the repayment
The repayment of a credit repurchase can be made over a period ranging from 1 to 12 years, or 144 monthly payments. However, it is possible to extend these periods by 13 years, i.e., 156 monthly payments. The repayment can reach 25 years with a guarantee for a real estate loan.
Advantages and disadvantages of credit repurchase
The main advantages of credit repurchase are, in general, the concept of credit regrouping.
A more advantageous rate
By extending the repayment period, borrowers benefit from a better rate than current loans.
A formula adapted to each borrower
By opting for a credit repurchase, the borrower benefits from a lower debt ratio and a reduction in monthly expenses.
A single monthly payment
Paying only one monthly payment facilitates the management of a household budget. Also, the payment is usually made on a fixed date. Credit repurchase is not without its drawbacks. The increase in the cost of the loan is certainly the most important disadvantage of credit repurchase. Indeed, by regrouping credits and extending the repayment period, you also increase the total cost of the loan. Thus, if the repurchase is practical to improve the financial state of a household, it does not allow to save money.
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