Reports from the Bank of United States show that the rate of household debt distress is steadily increasing. Burgundy, which is made up of Yonne , Côte-d'Or , Nièvre and Saône-et-Loire , is not spared by this increase. In 2013, INSEE published a report in which we could read that there were three types of debt: debt for investments , debt for consumption and private debt. Is the repurchase of credits a solution to get out of this infernal spiral?
Household debt in the Burgundy region
Before talking about the solution that is the repurchase of loans, it is essential to define the three types of debt in order to understand the reasons for the increase in the household debt ratio. So :
- Debt for investments . The price of real estate has skyrocketed in recent years. In Dijon, for example, the price per m² is approximately € 1,931. In Auxerre, it takes an average of € 1,613 per m². In fact, in order to become a homeowner, households have to borrow more over a longer period.
- Debt for consumption. The household lifestyle has changed. We invest in movable property ( vehicles for example), but also in the latest technologies ( Internet, Smartphone, computer… ). Households have recourse to loans to finance their project.
- Private debt. This category concerns unforeseeable life events such as divorce and dismissal . In Burgundy, the unemployment rate is around 9.2%. Mâcon and Nevers are among the most affected towns in Burgundy. The change of life has an impact on the household budget.
Being in debt means that the household is forced to live beyond its means (or almost). Resources are low in relation to charges (over-indebtedness: expenses correspond to 33% of income). To regain purchasing power, the household must increase its income or decrease its expenses . It is, in this perspective, that comes into play the repurchase of credits.
The repurchase of credits, what is it?
This solution, which is offered by the majority of credit institutions as well as banking organizations, works on a simple principle: to combine the credits in progress in a single loan . The new loan is subject to a single interest rate . The two factors for offering a lower monthly payment are the duration and the rate. The repurchase of credits has another advantage: there is only one interlocutor . In fact, in the event of an imponderable, all you have to do is contact your advisor to postpone the draft .
The equation is therefore easy to solve. The decrease in monthly loan repayments added to the increase in the remainder to be lived gives an increase in purchasing power . The household budget is stabilized. Conclusion: the repurchase of credits can be a good alternative . However, this option should be consumed in moderation. A loan commits and must be repaid.