Credit redemption , also known as ” loan consolidation ” is a combination of several outstanding credits in a single loan payment . In concrete terms, the lending credit institution purchases from all the other banks the loans you have taken out at home. In return, instead of being withdrawn from several monthly installments each month, you will be charged with a single loan term over a period determined at the time of the loan subscription.
Loan buyback is a financing solution offered by many credit organizations. What are the advantages of requesting the consolidation of your loans into a single credit institution? In this article, we have listed the benefits of buying back credits.
One and only monthly loan
One of the first benefits of consolidating all your loans is the collection of a single loan term in the month instead of several. Thus, once your monthly credit is withdrawn from your bank account by the lender, you no longer have other levies to come as was previously the case.
Decrease in loan maturity amount
When a bank or lending institution redeems all of your outstanding loans, the maturity amount decreases. This means that every month the amount of money left over from your budget to pay for your groceries, gas and leisure activities increases.
So you have two solutions: Either you benefit from this money saving to improve your daily life or be, you decide to save this sum on a savings booklet to face the unforeseen or hardships of life.
The cost of borrower insurance decreases
Since you only have one loan subscribed, you only pay one insurance contribution for your loan.
Previously, you pay as much loan insurance as you have underwritten. For example, if you were deducted from 5 consumer credit installments, you pay 5 borrower insurance contributions. Today, since you only have one loan, you pay only one contribution.
You benefit from extra cash in your budget
By decreasing the amount of the loan installment due to the loan consolidation , you benefit from additional cash in your budget corresponding to the difference between the sum of your previous credit installments and your current monthly payment.
Enjoy a lower interest rate
Depending on the period you took out your loan buyback, you can benefit from a more attractive loan rate. Tip: Compare loan proposals with each other (the total cost of loan consolidation) or log on to partners-finances.com , the online credit aggregator.
Better management of your accounts
Redeeming your credits with a specialized organization has the advantage that you manage your finances better. Indeed, it is easier for you to do your accounts when a single loan term is taken in the month rather than several monthly payments on different dates.
Reduced risk of over-indebtedness
Grouping all of its loans in one time reduces the debt ratio and therefore the risk of being over-indebted . By decreasing the borrowing monthly, you find a normal debt allowing you to cope with all your expenses on a daily basis (provided you do not subscribe to other consumer credits).