Over time, bank loans accumulate so that it becomes difficult to manage them or assume the repayment of monthly payments. To overcome this problem, subscribing to a loan buy-back can be an attractive solution.
Redeeming your credits: principle and operation
Credits, a double-edged sword. If they can get us out of a bad financial spell, they also constitute a danger when they are too numerous and accumulate. At this point, many people can no longer manage their various loans. The monthly payments have become significant, not to mention the difficulties of managing these various loans. One of the solutions that could solve the problem is to buy a loan. The idea is to gather all the loans in progress in a single repayable credit with a financial organization which will be the only interlocutor. Concretely, let’s say that you have a work credit of 2,500 dollars repayable over 5 years, a car credit of 10,000 dollars over 8 years and a consumer credit of 3,000 dollars over 4 years. After being combined, these three loans will be combined into one.
It is possible to combine only consumer loans or home loans or combine the two. But it is advisable to only opt for consumer loans especially if you benefit from a favorable rate on your mortgage. The transaction can even include bank overdrafts or other debts such as taxes or arrears. On the other hand, it will not be possible to include subsidized or regulated loans such as the loan, the 1% housing loan.
The advantages and disadvantages of this device
This concept of credit consolidation is starting to please more and more followers in the country. It must be said that it provides a range of advantages. It is mainly intended for households riddled with debts and credits. Because with this solution, it is possible to save up to 60% on monthly payments. The interest rate drops enormously and ranges from 5 to 9% (against 20% for a revolving credit for example). Thus, for a monthly reimbursement of 1350 dollars, the cost can drop to 800 dollars over a reimbursement period of 10 years. This credit consolidation will notably allow to have a higher living income and will oxygenate the budget. A good way to avoid the difficult end of the month. It is also advantageous to insofar as it will avoid filing an over-indebtedness file.
But watch out for the pitfalls. Credit consolidation doesn’t just have advantages. The problem lies in the extension of the repayment period. It is inevitable to lower the cost of monthly payments. However, this will increase the cost of interest payable, not to mention the various additional costs generated.
In short, this operation is only intended for people who are sure of having a good financial capacity to reimburse the monthly payments.