What are the different stages of a credit buy-back?
Whether it is intended to combine both consumer loans and real estate loans, or only consumer loans, a grouping of loans is a multi-step operation. If there are many similarities compared to a conventional loan, some disparities exist, particularly with regard to the constitution of the file and the final objective of the financial transaction. Back to the stages of a credit buy-back!
Step 1: analyze the financial situation beforehand
As with an ordinary loan, analyzing your financial situation is one of the essential steps before any request to buy back credit from the bank. This analysis will allow the borrower to assess the feasibility of the operation. With this in mind, the ideal is to carry out a credit buyback simulation online. During this, the borrower must fill out a form indicating in particular the amount to be redeemed and the desired repayment duration. Depending on the simulation tool used, the borrowing rate may be requested. If it is known, it can inform it. Otherwise, a default rate will be applied. At the end of the simulation, the borrower will know if his credits can be redeemed, and what are the repayment conditions.He will also have an estimate of the amount of the new monthly payment.
Note: two types of loan redemptions can be calculated
Via a simulation tool, it is possible to calculate a consumer credit buyout and / or a home loan buyout. This will of course depend on the nature of the borrower’s current loans.
Note also that an online simulation does not in any way engage the borrower in any credit contract offer.
Step 2: Compare the bundle offers
The second essential step in buying credit: comparing the offers! Again, simulators will prove to be valuable tools for the borrower. Ideally, it will combine simulation tools and credit buy comparators. A comparator will allow him to get a better idea of the rates charged, while increasing his chances of finding the most advantageous current rate. Because from one bank to another, the rates can be very fluctuating.
Good to know: compare offers, user manual
The borrower has only one data to observe on loan consolidation offers: the APR, or overall annual effective rate. This rate represents the total amount of the loan repurchase. Obviously, the lower it is, the better!
Step 3: make the buy-back request
Next step of buying back credit after finding the best rate: make a request to the bank concerned. If the bank supports a loan consolidation, the borrower will receive a policy response. He will have to check the conditions before continuing (rate, amount of monthly payments or repayment period). Because if the purpose of a grouping of loans is generally to decrease the amount of the monthly payments, these can also be increased if the situation of the borrower is suitable. In this case, the reimbursement period will be shortened instead of being extended. But in either case, the total cost of the loan can be lowered. It all depends on the redemption rate compared to that of the old credits (and the repayment period in the case of an extension).
Step 4: build your loan buyback file
After having chained the previous stages, the borrower will have to get down to the preparation of his file, file which will allow him to obtain an offer of contract of repurchase of credit and to validate the operation. In this file, documents relating to:
- personal situation (copy of marriage, divorce contract, etc.);
- his professional situation (copy of the employment contract);
- its financial situation (offers and amortization tables for outstanding loans, tax notices, salary slips, etc.).
Step 5: signing the loan offer
The stages of a credit buyout are coming to an end! After having sent his file to the bank and then obtained the loan consolidation offer, the borrower only has to sign the latter (after rechecking the loan conditions). From there, the bank will take care of closing all consumer and real estate loans in progress with the various credit institutions. Last formality for the borrower: sign the loan repayment letters intended for the old banks.
Good to know: the borrower has a right of withdrawal
If he should change his mind for one reason or another after having signed the offer of a grouping contract, the borrower can withdraw if he respects a certain period. This differs according to the type of buy-back. For a real estate loan buy-back, the deadline is 10 calendar days (ie weekends and public holidays included). For a consumer credit buyout, it is 14 calendar days.