Redeeming your credits is an operation that can be very profitable for your finances. But pay attention to the conditions, indeed a credit redemption can sometimes make you lose money. We bring you the keys to find out if your credit redemption project is really profitable.
Preparing your credit surrender file
Before launching your body and soul in the search for a solution to buy back your credits, take the time to prepare your file and compare the different offers. Each file is different and depends on your situation, your request, and credits that want to buy.
But debts incurred from your relatives, delays in the payment of your bills or unpaid bills from the public treasury may also be included in the redemption request.
The term “personal loan” is generally understood to include all loans that are intended to finance projects such as a new car, work in one’s home or the organization of one’s marriage. This type of loan is very widespread, because it allows to find a financing quickly and thus not having to wait to realize its desires. But on the other hand, if you accumulate several personal loans, it may be worthwhile to buy them to pay less for your monthly repayment.
Real estate loans:
If you have an older home loan with a higher rate, you have the option to redeem it in order to pay less interest. In the end, you will pay less money, and you can also negotiate the price of insurance of this mortgage which represents a significant cost.
If you have unpaid bills and an accumulation of late payments, you may have to pay a lot of late interest. By including this type of debt in your credit redemption, you can find a financial statement easier to manage with a single monthly payment to repay these debts.
A. Analyze redemption and negotiation fees
Two types of fees can be identified: those relating to the repurchase of capital and interest that depend on seniority, and the penalties that are due in the event of prepayment.
The seniority of the credits:
Most credits include one or more clauses regarding the total or partial repayment of the amount borrowed; since this ultimately amounts to early repayment through the purchase of credit. Depending on the age of your loan and therefore your duration of engagement with the credit institution, the cost of early repayment may be higher or lower. A bank makes money when it lends and earns interest. The longer the repayment lasts, the more money the bank will earn. It is therefore logical that if you buy back your credit very early, you will have to pay more than if you apply when a large portion of the principal is already repaid. Because during a credit redemption, you must repay the principal and interest to be paid. But buying back the credits with a lower rate, and a lower monthly payment can save you money in the long run.
Penalties due to early repayment:
Penalties may also be required for you to redeem early on a redemption. This type of penalty only concerns mortgages, indeed personal loans can be bought back without having to pay a penalty. In general, the amount of prepayment or redemption penalties is equivalent to 3% of the outstanding amount.
B. Finding your credit redemption intermediary
Many organizations offer their services to buy back your credits. You have the choice between a conventional establishment like a bank, or to make your request for credit redemption directly online. You can also hire a broker, but the broker will bill you for services based on your request and complexity. It is possible to renegotiate with your bank your credits, but be attentive to the conditions that are proposed to you. Indeed, some will not hesitate to charge you fees or worse, force you to open accounts whose management is paid to recover their stake. The best solution will then be to proceed with the redemption of your credits by prepaying directly with your creditors. All you need to do is apply for a simulated buy-back of credit between individuals, as proposed by Younited Credit.
C. Beware of credit scams
We advise you to be very attentive to the offers of credit redemption of certain organizations. Check first that it is approved by an organization dependent on the Banque de France, such as the ACPR (Prudential Control and Resolution Authority), or mandated as an intermediary in banking operations (IOB) by one or more financial institutions. Then, take the time to determine whether the operation of buying back your credits is profitable, by comparing the cost of the repayment of your initial credits against the total cost due after the purchase of your credits. Some organizations, although well-chartered, will not hesitate not to try to rip you off. This is particularly the case for certain credit redemption brokers who ask you to pay fees to study your file. They should not ask you to pay such fees before final acceptance of your file and after you have signed it.
The profitability of a credit surrender
The main interest of a credit redemption is to be able to consolidate all the monthly payments into one and reduce it, and as far as possible lower the total cost of the repayment of the capital.
A. Purchase of profitable personal credit
Personal credits are a good part of the demand for a credit buy-back. This is why it is important to define precisely whether buying back such credits is profitable or not. The law requires no penalty to be paid in the case of early repayment or repurchase of credit. In order for this type of credit to be as profitable as possible, we advise you to take part in its repayment by contacting your creditors for the repayment of your previous debts. This way you save the money you ask for, for example, a broker or a specialist organization in the pooling of credits.
B. Purchase of profitable real estate credit
Real estate loans are also eligible for credit redemption, but they are also often renegotiated directly with the lender. Repurchasing a loan made as part of a real estate project may also be an opportunity to renegotiate or change insurance and thus reduce its cost. The purchase of a home loan takes a little more time, and especially often involves quite large sums. That is why it can be tempting to ask an organization to take the necessary steps. But the brokerage fees can be of the order of 5% of the amount of the new credit, so it is necessary to measure well whether the interest to involve a broker is essential considering his remuneration.
C. Purchase of profitable revolving credit
Redeeming one or more revolving credits is often a good opportunity to save money on their repayment. Indeed, the rate of a revolving credit is said to be “variable”, that is to say that it can evolve over time, either upwards or downwards. A revolving credit is increasingly regulated by legislation because the rates offered are high and obtaining such credit is less complicated than a personal loan. So do not hesitate to ask for a redemption for all of your revolving credits so you do not lose money by repaying it. To ensure its profitability, you must take into account the total cost of reimbursement against the total amount of your new credit. In addition, the monthly payments of the new credit may be lower, and so you can spare your monthly budget and find more purchasing power.
The simplest way to compare several credit buy offers is probably to make the comparison through a table. In order to help you, we offer you an example of credit buy comparison to find the most profitable way.
The repurchase of credit is often a useful solution to bring together all the monthly payments of several credits. But do not forget that a credit redemption is also an opportunity to save money by taking advantage of new offers offered by competing institutions. Several solutions exist to buy back its loans, be they consumer loans, revolving loans or mortgages.
There are many ways to buy back credit, if you want to know more you can consult our file on the different ways to buy back credit. In the case where your purchase of credit relates to a consumer credit, you can directly consult our thematic file on the subject: how to obtain a buy back of consumer credit.