When a borrower has several loans to his credit and he finds himself in a situation of excessive debt, the best solution to get out of it is generally to make a loan repurchase. In the country, this financial transaction is very widespread. What is it based on? Is the repurchase of credit in the event of over-indebtedness the only recourse available to the borrower to pay off his debts? We answer all of these questions, and more.
Some explanations on the concept of credit repurchase
Credit repurchase is also known as credit consolidation or debt restructuring. This financial solution consists of combining two or more existing loans into one. The borrower is then no longer liable for a single monthly payment, which he must pay to the bank that granted him the loan repurchase, and no longer to various credit organizations. At the same time, the credit is rescheduled, that is to say that the repayment period is extended. Goal? Decrease the amount paid each month by the borrower, thereby decreasing his debt ratio and helping him to stabilize his situation.
Insofar as a longer repayment term implies a higher final debt – since the rate increases accordingly, – a loan repurchase will ideally present a lower rate than the average rate of old credits. Ultimately, the risk of being in debt again is minimized.
In the country, credit consolidation can take two forms. We distinguish :
- the repurchase of consumer credit, which concerns only consumer credit;
- the repurchase of mortgage loans, which concerns both consumer credit and mortgage loans.
A bank may very well be specialized in one form of loan buy-back only. It can also offer both the purchase of consumer credit and the purchase of mortgage.
Credit buy-back to avoid over-indebtedness: the only solution?
No. Borrowers who can no longer assume their debts can also file an over-indebtedness file with an over-indebtedness commission, managed by the bank. The procedure is completely free. But not to have to get there and thus, hope to alleviate the complications, the borrower has every interest to react at the first financial difficulties. The repurchase of credit offers an interesting solution vis-a-vis an emergency situation. This is the phase preceding the filing of an over-indebtedness file.
Of course, the choice of one or the other of these solutions will depend above all on the degree of debt of the borrower. It is best to first contact your bank to make a precise analysis of the situation.
You should know that not all over-indebtedness files are admissible. The borrower can nevertheless contest the decision to reject the commission within 15 days of its notification. It will then be up to the judge of the district court to decide. If, in view of the borrower’s situation, the judge finally declares the application admissible, the investigation of the file continues. Otherwise, the procedure ends. Note also that professional debts are excluded from an over-indebtedness file. Only personal debts are taken into account (consumer loan or mortgage loan maturities, overdrafts, tax arrears, unpaid gas or water bills, etc.).
Good to know: the elements to include in an over-indebtedness file
To allow the debt commission to study its situation, the borrower is required to include in its file many supporting documents. These will relate for example to:
- his identity ;
- his marital status;
- the situation of dependents (over 16 years of age);
- his professional situation;
- its monthly resources;
- its heritage;
- its monthly current expenses;
- his current loans (home loan, consumer loan, revolving loan, etc.).
How to find the best consumer credit buy-back rate?
To find the most advantageous credit buy-back offers, nothing better than to carry out a credit buy-back simulation and turn to a comparator. By carrying out these two operations jointly, the borrower will increase his chances of finding an attractive rate. The latter will preferentially focus his research on fixed-rate consumer credit. It is a guarantee of security, all the more when one has to face a large debt and that one has multiple credits to his credit.
To further reduce the rate of his loan repurchase, and therefore the amount of his monthly payment, the borrower can also use the insurance delegation, also called loan insurance outside the bank. The idea? Take out borrower insurance not with the bank granting the credit consolidation, but with another establishment offering lower contributions. Moreover, the borrower can again use a comparator to find the cheapest and most suitable insurance solution for his situation.
Credit repurchase file: supporting documents to provide to the bank
As part of a credit buyback, the bank will ask you to include several documents, such as:
- a photocopy of your identity document;
- a photocopy of your family book;
- proof of address ;
- a photocopy of the marriage contract or divorce decree, if applicable;
- offers of outstanding loans (personal loan, home loan, etc.), accompanied by amortization schedules;
- a copy of the act of purchase of your property or that of your last 3 rent receipts.
Credit repurchase and over-indebtedness are two distinct concepts, but ultimately closely linked. Excessive debt linked to different consumer loans? With us, consider the future more serenely by taking advantage of unbeatable … and fixed rates, for a constant monthly payment! A credit union request will only take a few minutes. You will then receive a final response within 24 hours. As a bonus, regardless of the amount of the credit repurchase, you will not be charged any prepayment fees. With us, no hidden costs either: clarity, simplicity and speed, that is our policy! The best way to find an attractive loan repurchase rate is to turn to both a simulation tool and a comparator.