Too much consumer credits? Think about redemption of credits.

Consumer credit, whether it relates to earmarked or unrestricted loans, is a great financial tool to finance your projects other than the purchase of real estate. However, it is still an amount to be repaid each month, and it can happen that credits accumulate until you put yourself in a difficult financial situation. The solution of buying consumer credit can then bring you a real breath of fresh air and allow you to find a balanced budget.

The different types of consumer credit

The different types of consumer credit

Consumer credit is a contract by which a lender (a financial institution) provides you with a sum of money (up to 75,000 USD) which must be repaid in installments and which is not intended for the purchase or construction of real estate. There are two types: assigned credit which finances a defined asset such as a car, a gift, a trip, capital equipment, works.

Unrestricted consumer credit makes it possible to obtain a sum of money, the use of which is left free to the borrower. Thus “personal loans”, “revolving credits” (formerly called revolving credits), fall into this second category of unrestricted credit.

In the majority of cases, consumer credit is distributed by banks and most so-called specialized establishments. These establishments are regulated and controlled by the banking authorities and grouped into professional associations (the FBF and the ASF).

Restricted loans, on the other hand, are mostly taken out outside of bank branches, and mainly in retail and distribution companies. Since the 2010 reform, the employees of these companies who are not bank staff must be trained in the distribution of consumer credit and in particular in the prevention of over-indebtedness.

Reasons to redeem consumer loans

Reasons to redeem consumer loans

Despite all your precautions, it may happen that your consumer credits accumulate to threaten the balance of your budget. The monthly payments then become too heavy and your living quarters decrease until becoming insufficient to ensure your regular expenses. In this situation, your debt is too high and it becomes urgent to take action.

The purchase of credits allows you to find a balanced budget. It is also a timely solution when a change in family or professional situation causes your income to decrease. Likewise, when you are considering new investments but your indebtedness no longer allows you to take out a new loan, buying back credits can be of great help to you.

The characteristics of buying back consumer loans.

The characteristics of buying back consumer loans.

The principle of buying consumer credit is simple . The idea is to have all of your consumer loans bought back by your bank or other financial institution, and replace them with a single loan on more favorable terms. This can be done regardless of the number of consumer loans and whatever their rate or duration.

After buying back credits, you will only have to pay one monthly payment, adapted to your income and current expenses. You can thus lower the amount of your monthly repayments in order to find a healthier financial situation.

In some cases, by extending the duration, you can reduce your reimbursement charges by more than 50%. The purchase of consumer loans can also include other debts (such as tax arrears) or an additional amount that will allow you to finance new projects.

This redemption of consumer credits takes place over a period of between 5 years and 12 years. You also have the option, if you own a mortgage. This is called mortgage repurchase and in this configuration, you can get a longer loan term, up to 25 years.

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