In the banking and insurance world, we talk about it a lot. The repurchase of credit constitutes a solution more and more adopted by individuals in financial difficulty. What is the particularity of this offer and how to take advantage of its advantages by bringing competition into play? Answers.
The repurchase of credit: a godsend
Also known as credit consolidation, redemption credit is a banking transaction by which a lender agrees to buy back one or more current loans to assemble them into a single loan.
It can be a question of a mortgage or consumer loans. In the case where the receivables include both credits, it is the law on real estate loans that are taken into account when the share of real estate is greater than 60%.
If it is the proportion of consumer loans that is more important, the contract falls under the regulation related to consumption. Once all the loans are grouped, the borrower pays only one monthly payment, for a single interest rate.
The advantage of such an operation for the customer is the lower monthly payments. The repurchase of credit specific to retirees makes it possible to clean up its budget and simplify its management.
The repayment is spread over a longer period which allows this reduction in the amount to be paid every month. If more and more banks are offering this offer, it is because they are also winning.
The extension of the repayment period significantly increases the interest payable by the borrower, which generates capital gains for financial organizations.
Use the services of an intermediary to bring competition into play
To attract borrowers, banks operate a few techniques. One of them is to offer a favorable annual percentage rate. The smaller the compensation term, the more moderate the rate.
But in exchange, the customer will be required to repatriate his accounts and his savings to the financial institution which granted the redemption. Again, this is a way for banks to make money.
Faced with the advantages of pooling loans, these institutions compete with each other. This phenomenon is of interest to borrowers who can subscribe to organizations offering the most advantageous contracts.
And to find the most interesting offers, they can use the services of a Banking Intermediary(IOB). Its role will be to find the most favorable offer adapted to the borrower’s needs. To do this, it will compare all the proposals made by the banks and will only retain the one that is considered the most attractive.
This professional has greater negotiating power thanks to the many cases he brings to financial institutions. This competition guarantees access to a better rate for the customer.
Besides, the latter does not have to pay for the services of the BIO because it is the bank that is responsible for paying its remuneration. In the process, the expert will provide advice to borrowers to ensure the success of their procedures.