There are many solutions you can resort to when you are in a situation of over-indebtedness. For example, you can opt for the repurchase of credit which is a rather practical solution.
What is credit buy-back?
To redeem a loan is to take out another loan in order to settle it in advance. This solution is practical when you can no longer pay your monthly payments without deteriorating your standard of living. Thanks to the repurchase of credit, you will then be able to repay your debt from a new repayment plan, and pay single monthly payments for all your old credits thanks to the credit consolidation.
Generally, this repayment period is longer in the case of a credit repurchase, to allow the level of monthly payments to be lowered. Thus, debt repayment will be easier for the over-indebted borrower, who will thus be able to maintain a decent standard of living and assume other household expenses: child rearing, vacations, etc.
Who to contact for a credit buyout?
The first point of contact you will need to approach is your own bank. Indeed, it is entirely possible to negotiate with your bank so that the repayment schedule is redefined, with a new rate and a longer repayment period. Generally, this operation does not please the banks, but you can always try it, because you should know that your bank does not like to see its customers go to the competition either.
In case of refusal, you can always turn to competing banks, which generally offer attractive conditions. However, remember that it is important to compare the different offers before you get started. If necessary, you can also call on a mortgage broker, who will be able to guide you as best as possible to find the loan offer that suits you as part of your loan repurchase.
Finally, be aware that there are establishments specializing in the repurchase of credit. The advantage of using their services is that the formalities will be reduced. Be aware, however, that their compensation can sometimes be quite high.
Credit repurchase: think about the associated costs
Be aware that the repurchase of credit can constitute an effective solution for a restructuring of debts, because you will profit from lighter monthly payments thus more viable. However, it should not be forgotten that this operation necessarily has a cost. First of all, you have to take into account the early repayment indemnities of your old credits, which amount to 6 months of interest, but capped at 3% of the capital remaining due.
Then, it will also be necessary to take into account that the lengthening of the duration of repayment of your debt only increases its final cost. If for example your credit was initially on 15 years and you extend the repayment term to 20 years, you will have a surplus of 60 monthly payments for which you will have to pay interest and insurance premiums.
But in any case, it is always an interesting solution insofar as it allows you to restructure your debts and get you out of over-indebtedness, because it allows you to pay off your debt at your own pace and according to your possibilities.