The repurchase of credit is a financial operation whose demand was on the rise in 2016 with + 15%, according to the files deposited on the site of Good Bank. In order to better understand the objectives of buying back loans, Good Bank gives you some definitions.
Credit repurchase: some definitions are necessary
First of all, some definitions are necessary to better understand the credit buy-back. This financial solution is also called “debt restructuring” or “credit consolidation”. The challenges of this operation are multiple. The borrower can ask a loan repurchase broker to reduce his debt ratio, obtain additional cash or finance new projects.
The repurchase of credit makes it possible to regroup all the loans of a borrower in only one, the consumer credits, and if necessary a mortgage. Two types of credit redemption therefore exist: consumer credit redemption and mortgage credit redemption. The repurchase of mortgage credit includes a mortgage in the operation but requires a guarantee, namely the mortgage of the property. Once the repurchase of credit carried out, only one monthly payment and only one interest rate will have to be reimbursed. No more multitude of credits.
What is the debt ratio?
It is the share of the borrower’s expenses in relation to his income. To calculate it, it will be necessary to take all the charges, divide them by the net fixed income and multiply them by 100.
In general, banks do not accept to lend money if the debt ratio exceeds 33%. It all depends on the income of the borrower and his remaining living. This corresponds to the amount remaining after the charges have been deducted. The debt ratio provides information on the borrower’s repayment capacity. If the debt ratio is too high, the borrower will find it more difficult to repay his loans. For this reason, buying back credit can be a solution in order to reduce the household debt ratio.
Compare credit buy-back offers
The advice of Borrowing, if you are embarking on a debt restructuring project, is to compare the offers on our credit buyback comparator. This will allow you to get the best offer on the market with a competitive rate. The rate of the repurchase of credit is indeed an important element since over the term of the credit, you will have to repay the interest in addition to the principal.
On our site you can also carry out credit repurchase simulations online. These calculations will give you a first idea of the interest of the operation.