We have been hearing a lot about credit buying for several years or even decades. In reality, what is a credit buy-back? What parameters should be taken into account when embarking on such an operation? See mact-asso.org for an observation
What is the repurchase of credit?
Sometimes borrowers have more than one loan to pay off at the same time. It can be auto credit, mortgage, consumer loan or others. Whether financially or simply in terms of organization, it is difficult to manage the reimbursement of all these credits. Indeed, each loan matures in the month, its interest rate, etc.
The repurchase of credit then consists in regrouping all these credits to repay only one of them. There are many advantages for the borrower:
- Benefit from a reduction in the weight of monthly payments thanks to the longer repayment period
- Have a better financial organization, because there will only be one credit to repay each month
- Make a fresh start and avoid filing as a banking ban within the Fine Bank, because the unpaid credits have been settled to take out another, grouping them all together.
Take a serious look at the rates charged
When you take out a bank loan, the interest rate is often the first thing you look at. This is all the more important when it comes to buying back credit. In fact, the slightest difference in rates can amount to thousands of dollars, if the amounts are transferred over the entire schedule.
Also consider which of the two is more attractive: the fixed or variable interest rate. In all cases, it will be necessary to wait for the moment when the rates are at the lowest to proceed to a repurchase of credit, this will allow you to limit, even reduce the cost of the operation.
The extension of the monthly payments increases the final amount reimbursed
As much to say it, the repurchase of credit is a solution of relief, which is paid dearly. Thanks to the repurchase of credit, you start from scratch, all slates erased. However, you are taking out a new credit, equivalent to all those that have recently been sold.
Obviously, it will be easier for you to repay this new credit, since the monthly payments have been reduced, so as not to weigh on your purchasing power. But that comes at a price: when the monthly payments go down, the repayment tenure increases. One thing resulting in another, you will then have to pay more interest than initially, since the number of monthly payments has increased.
Don’t forget the additional costs
Often, people embark on a credit repurchase transaction, without taking into account certain costs which may turn out to be higher or lower, depending on the case. For example, this is the case with broker fees and bank charges, or even disability death insurance, often claimed by the bank that buys your credits.