A repurchase of credit makes it possible to obtain a single reduced maturity by increasing the repayment term, but also to lower the rate of the various outstanding amounts. The management of the borrower’s budget is both simplified and improved.
All types of loans can be grouped: consumer loans, revolving credit, real estate credit, but also bank overdraft. What is the acceptable credit surrender rate for the transaction to be attractive?
In which situation should a credit surrender be used?
The repurchase of credit is advantageous according to the financial situation of the borrower.
- – If the objective is to reduce its debt ratio, the cost of credit and the duration are the most important. The repurchase of credit will reduce the monthly payment by extending the repayment term. Even if the total cost of credit is higher, the borrower is looking for a breath of fresh air in the management of his finances.
- – If the objective is to shorten the loan period, the monthly payments will be higher, but the credit rate will be reduced. He will be able to finance another project more quickly.
How to compare credit redemption rates?
The rate of a credit corresponds to the remuneration of the lending organization. It can be fixed or variable. In any case, you will always be advised to compare TEAG (overall annual effective rate) and not the nominal rate because financing costs are not included.
In fact, rather than the TEAG, it is the total cost of credit that must be looked at. Why ? Because a TEAG too interesting can hide a high TAEA, that is to say an effective annual rate of insurance expensive.
What is the best credit redemption?
To lower costs, the delegation of insurance is the best solution. Indeed, since the law, any borrower has the option of opting for individual loan insurance. Its cost is calculated on the capital remaining due and not on the capital borrowed so much more advantageous.
But beware, for the delegation of insurance to be accepted by the bank, the borrower must offer him guarantees at least equal to that of group insurance.