Can we make a second repurchase of credit and beyond?

The purpose of the credit repurchase is to consolidate all the outstanding borrowings to subscribe to only one. This operation makes it possible to renegotiate the borrowing rate downwards and to have only one repayment deadline. In return, the repayment period is extended. These are the same reasons that can cause borrowers to make a second loan repurchase.

What are the conditions? What are the advantages of repeating the operation and how does a second loan buy-back work? Let’s come back together on this opportunity which allows you to rebalance your financial situation and free up cash to make new personal projects a reality.

What is a second credit buy-back?

What is a second credit buy-back?

A second repurchase of credit consists in wanting to make a second grouping of loans after having already carried out a first one. As a reminder, a credit consolidation allows you to redeem all of the credits taken out to present only one. In other words: the borrower pays only one monthly loan term, the amount of which is determined by the initialed credit buyback contract.

The interest of a second repurchase of credit is identical to the first: to combine all its loans in only one spread out in time. Objectives: lighten the monthly repayment and take advantage of a more favorable credit rate. The subscriber thus relieves his financial situation just as much as he clarifies it. Indeed, it no longer applies to only one lender in the context of a single loan.

The borrower finds a balanced budget more suited to his personal, professional and financial situation. It also benefits from new room for maneuver in terms of cash flow to finance a project such as a trip abroad, the purchase of a vehicle, work in accommodation, the anticipation of funeral expenses, etc. As long as the situation is tenable, anyone can request a second loan repurchase because, theoretically, the number of credit groupings is unlimited.

How much time should be respected between two credit buy-backs?

How much time should be respected between two credit buy-backs?

However, requesting a loan repurchase for the second time involves respecting certain constraints. The first of these concerns the period between the first credit consolidation and the second. You must wait at least one year between the two requests with the exception of two scenarios:

  1. This period of time between two repurchases of credits does not have to be if the subscriber uses this new grouping of loans to finance a new project. This is, for example, the case of a future retiree who decides to take out a loan to start unexpected renovation work on his home. Although he has already made a first loan repurchase, he repeats the operation by combining the single loan with the new loan required to carry out his work.
  2. The delay condition for the second credit repurchase is also removed when the amount of the second credit repurchase is higher than the first. This gap, however, must register within reasonable proportions: 20% of new credit over the amount of 1 grouping of loans made.

In which cases can we take out a second loan buy-back?

In which cases can we take out a second loan buy-back?

The purpose of the second credit repurchase is to reduce the monthly repayment. If an individual or a household believes that their financial situation is tending to become unbalanced, they can request a new loan restructuring by buying back their first loan repurchase.

Without being exhaustive, several situations may lead to considering this solution again:

  • to take advantage of a low interest rate environment in order to reduce its monthly charges and thus reduce its debt;
  • to make a partial early repayment of the previous loan repurchase following the reconstitution of savings resulting from the first refinancing of old credits;
  • to lower the level of debt when buying real estate;
  • to cope with new or unexpected expenses;
  • to finance a new project without increasing the debt ratio;
  • to avoid having to use revolving credit when you lose your job, retire or separate.

How does a second credit buy-back work?

How does a second credit buy-back work?

In addition to thinking about respecting the time limit condition on the second loan repurchase, the first step consists in starting a renegotiation of credit with the lending institutions. The purpose of the discussions is to prevent prepayment penalties from affecting the consolidation of credits in progress. It is possible to go through an intermediary who will defend the request with banking establishments in complete neutrality.

Everything then depends on traditional criteria:

  • updated study of the borrower’s profile (personal, professional and property situations);
  • repayment capacity;
  • bearable debt ratio.

A feasibility file is sent to the lender. After passing before an internal commitment committee, the second credit buyback file receives a favorable opinion or is refused. The instruction period is spread over ten days.

Good to know : banks are more receptive to a second repurchase loan when the person is faced with the consequences of a life accident.

Compared to conventional documents, the lender can claim a guarantee per payday session or the subscription of a mortgage loan. This is intended in particular for owners and applicants in the process of home ownership, when the amount to be purchased exceeds the threshold of $ 200,000. A tenant can also use it if he can guarantee his loan with real estate.

In the event of a favorable outcome, the bank transmits a credit repurchase offer, the subscriber legally having a 10-day cooling-off period if he wants to buy back mortgage loans. The signing of the contract confirms the offer of second loan repurchase, knowing that a withdrawal period exists for 14 days for consumers of consumer credit, two weeks during which the funds are frozen.

Minimum and maximum amounts for a consumer credit buyout?

From allocated credit to revolving credit via student loan or personal loan: a consumer can perfectly restructure his consumer debts by carrying out a grouping of loans. But if a consumer credit is capped at 75,000 USD, what is the maximum amount of a consumer credit buyout?

Furthermore, what projects can such an operation finance? From the best consumer credit rates for households in financial difficulty to the possible role of mortgage recharge for homeowners, here is the information to know.

What is the maximum amount for buying back consumer loans?

What is the maximum amount for buying back consumer loans?

The maximum amount for a consumer loan is set at 75,000 USD, while the minimum threshold is 200 USD. When a loan is more than 75,000 USD, it is no longer legally a consumer credit. In other words, the operation no longer falls within the framework of the Lagarde (2010) and Scrivener (1978) laws.

The borrower no longer benefits from this legal protection enshrined in the Consumer Code. He must therefore monitor the clauses of the contract itself, in particular the duration of repayment, the borrowing rate, the amount of the monthly payments or even the clauses ruling on the early repayment and withdrawal.

On the other hand, a loan consisting of a contract for grouping consumer credits can be greater than 75,000 USD. In addition, and for information, the minimum amount for a consumer credit repurchase is evaluated at 1,500 USD.

What can we finance with a buyout of consumer loans?

The consumer loan allows:

  • to buy movable property (capital goods for the home or the person, car, etc.) or the provision of services (travel, etc.);
  • to have cash;
  • to pay for housing work (except if the repurchase of credit includes a mortgage guarantee);
  • to contract a rental with option to purchase (LOA);
  • to group together several consumer credits in progress, including if the amount of the loan is greater than $ 75,000 and if the loan guarantee is not a mortgage.

What types of consumer loans can you combine?What types of consumer loans can you combine?

The repurchase of consumer credits consists in regrouping in a single loan all the current consumer credits. However, there is not just one type of consumer credit. Among the associated banking products, we can cite:

  • affected credit: this is a loan reserved for a specific project. Example: the funds of a car loan are necessarily dedicated to the purchase of a vehicle. Remember that the transaction lapses if the credit is canceled or if the good or service is not delivered;
  • personal loan: this is a credit whose funds can be allocated at the discretion of the subscriber;
  • revolving credit (revolving credit): it is a reserve of money loaned by a financial institution. The borrower pays interest on the sum only when he draws on this credit;
  • student loan: this is a consumer loan guaranteed by the State, the loan amount and duration of which are established by the lending organization. The subscriber is under no obligation to link the funds lent to the direct or indirect financing of his studies;
  • the authorized overdraft.

Good to know : the maximum duration of a consumer credit buy-back is 12 years.

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What are the consumer credit rates?

What are the consumer credit rates?

Consumer credit rates vary depending on the length of the loan and the amount of the loan. In order to attract and retain young customers, financial institutions appear more generous for student loans, the rates of which fluctuate between 0.8% and 3.5%. Standard personal loan rates offer a wider range, ranging from 2.5% up to 10%. Finally, the rates of affected consumer credits are on average between 4.5% and 9%.

Revolving credit stands out because of its evolving rates based on financial market rates. In other words: it is impossible to know the cost of the credit during the subscription. Taking into account the different criteria, the rate of a revolving credit can swell up to 20%, a real threat for unsophisticated borrowers. However, revolving credit often appeals to individuals in search of funds quickly. Faced with a lack of awareness of the final cost and the link with speculative stock markets, it is regularly criticized as a gateway to over-indebtedness.

Good to know : a financial institution applies a more advantageous real estate rate only if the grouping of loans consists of at least 60% of real estate loans.

Increase the maximum amount of a consumer credit buy-back thanks to the mortgage top-upIncrease the maximum amount of a consumer credit buy-back thanks to the mortgage top-up

To obtain a consumer credit buyout, the borrower must present an acceptable feasibility record and guarantees to convince the lending organization to make an acceptable offer. The debt ratio necessarily enters the equation, knowing that the threshold after the repurchase of consumer credit must return to the standards of the financier.

A household in financial difficulty can thus have problems in obtaining the confidence of the banks. Homeowners can then include a mortgage guarantee, for example, to obtain a lower interest rate or to extend the repayment tenure. Others may obtain a modulation of the amount of the maturities over time. This solution concerns owners who have already reimbursed a large part of their mortgage. They have an envelope coinciding with the amount of capital already reimbursed.

Example: the couple has a house estimated at 180,000 $. With the 30% discount, the financial institution will estimate its value at $ 126,000. The remainder to be paid is $ 100,000, so their available mortgage reserve amounts to $ 26,000. The couple can increase the amount of their loan repurchase by guaranteeing it with a mortgage recharge of $ 26,000.