It is a real fact! More and more households keep filing over -indebtedness files with the Bank of United States. In December 2015, for example, no less than 18,441 cases were reviewed and only 1,357 were rejected. Debt consolidation can be a possible solution to get you out of this debt cycle and allow you to live comfortably while optimizing the budget. How does credit redemption work? Understand the terms used, thanks to our lexicon , by financial organizations to better analyze your contract.
How the loan buyback system works
Settle all of your debts with the various creditors so that you have only one credit in a single financial institution ( banking establishment or a credit house ); this is the goal of loan buyback (also called loan restructuring). All the credits collected benefit from a single rate which will be defined in the loan offer.
The repurchase of credits, in a few words, is:
- Flexibility in managing your financial budget.
- A decrease in the debt ratio .
- A single loan from a single organization.
- A reduction in monthly payments .
How is it possible to reduce the monthly payments?
Here is a question that is certainly stuck in your head. The answer is simple. To be able to reduce the monthly drafts, the organization offers to extend your borrowing period . Mechanically, the total cost of credit increases. Of course, before granting the repurchase of credits to a consumer, the organization needs to know the personal as professional situation of the applicant. You must also be able to inform the financial expert about his repayment capacity (ratio between income and expenses) and about the guarantees available to him:
A stable job seeker who manages his budget correctly will have a better chance of obtaining a loan buyback. You should also know that it is not necessary to make a request if you have filed an over -indebtedness file with the Bank of United States. In short, you have to put together a concrete file to have the right to buy back credits by providing supporting documents ( pay slips, tax notice, proof of address, identity document, etc. ).
In addition, we want to get your attention! All organizations do not offer the same products in terms of credit redemption. It is therefore necessary to analyze the market in order to find the best offer according to your needs, but also to your personal and professional situation.
Organizations simply offer the renegotiation of credit (or) mortgage (s) or the restructuring of consumer loans. Others go much further in financing plans since they offer the grouping of mortgage loans with consumer loans, not to mention bad debts and bank overdrafts .
Glossary of most used terms
In order to better understand the terms used by financial advisers, we have established a small lexicon of credit consolidation.
- Repayment capacity (or debt) : this is the amount remaining at the disposal of an applicant after having deducted all the charges in his possession.
- Over-indebtedness file: this is a file sent to the Bank of United States to assess its over-indebtedness and get out of this infernal spiral.
- Loan : sum of money made available to a borrower by a banking or credit organization to finance its projects. The base capital is subject to a variable or fixed interest rate.
- Loan offer : the loan offer is a document presenting the financing plan . The loan offer is not the final acceptance. By law, the offer is only validated when the applicant has signed the agreement. He has 10 days to consider the proposal.
- Single rate : this is the interest rate for the repurchase of credits, regardless of whether a loan has an interest rate of 11 and another of 3.
- Variable rate and fixed rate : these groups of words designate the interest rate of the loan . The fixed rate is the same throughout the term of the loan, while the variable rate is likely to go down as well as up. It is better to opt for a fixed rate.