The purpose of the loan redemption or loan consolidation is to rebalance the household budget. Once the rent and all other expenses are paid, there is sometimes not much left to cope with daily expenses. It is at this point that a credit buyback operation can be useful. By setting up a single monthly payment with a single loan, the household debt ratio can be considerably reduced. In some cases, the total decrease in the new monthly payment can reach 60% less than the totality of the previous monthly payments. If the borrower is a tenant, he has the opportunity to make a specific redemption of credits to tenants.
Definition of the repurchase of tenant credits
The principle of buying tenant loans is to allow the household to reduce its debt. When the household only works to pay its credit maturities and does not allow any relaxation and leisure time because its budget is suffocated, the consolidation of all its debts is a solution that can get out of this difficult situation. The financial package is tailor-made, depending on the borrower’s repayment capacity and needs, in order to rebalance the household’s budget on a sustainable basis. All loans in progress are grouped into a single loan, the rate of which is revised downwards and the duration extended. In addition, this type of transaction makes it possible to benefit from additional cash in the context of the redemption request, which then makes it possible to finance a new project. The maximum amount generally granted is 8,000 euros, and the borrower must provide supporting documents such as an estimate, a purchase order or an invoice.
The repurchase of tenant credits is addressed to any person who rents a housing, house or apartment, but also which is sheltered by the family or a third party. The age range must be between 18 and 85 years on average and the applicant must be an employee (on permanent contract for more than three months, or in fixed-term contract for several consecutive years). The repurchase of tenant loans is of course also open for retirees, the liberal professions and independent, provided they can justify regular income. The profile for a tenant loan redemption is a borrower who is not in the process of repaying a home loan.
The repurchase of tenant credits can regroup all consumer credits, personal loans subscribed without supporting documents, allocated credits (work, motorcycle, car, etc.) and revolving credits. On the other hand, in addition to these loan debts, it can also include other debts such as bank overdrafts, late payment of taxes or rent and personal debts, whether family or due to third.
The maximum repayment period for the repurchase of tenant loans is 12 years, that is to say 144 months. As for the maximum amount to borrow, it is capped at 100,000 euros. Note that for a debt over 100,000 euros, the family or a relative can vouch by bringing a real estate mortgage. If it is the parents who decide to do so, the co-heirs (brothers and sisters or others) will have to give their agreement. It will not be a question of setting up a mortgage strictly speaking, but rather an insurance bond on the property, which will make it possible to buy all the consumer credits up to 80% of the value of the good.
The purpose of the repurchase of tenant credits
The main motivation for using this type of operation is the systematic refusal of banks to grant new credit. This means that the borrower’s debt ratio is too high, so the goal is to lower it. To collect all the debts and the loans in a single monthly payment, will make it possible to give air to a budget stifled by too many deadlines of credits. Another opportunity for the borrower who decides to buy back his credits: become owner. Because with too many loans in progress, banks and credit organizations are very reluctant to grant a new loan, while with a single monthly payment, the debt is reduced and during a mortgage simulation, the doors are closed. much more open for the purchase of housing.
Consolidation of loans as a tenant also helps to cope with the decline in income at the time of retirement. The operation will reduce the amount of monthly withdrawals, which will bring more financial comfort to the household in his daily life, even if the repayment period is longer. The retirement pension is a guarantee of stable income for the financial institutions, they willingly give a loan to retirees.
Another very popular principle of the redemption of credits for tenants is the fact of being able to benefit from a sum of money which is integrated into the total amount borrowed. When mounting the file, the borrower can apply for this cash to the organization that grants the loan. It can be used to buy a car, a new computer, etc., or renovate in his home for example. Once all outstanding credit installments are cleared by the lender, the additional funds borrowed will be deposited into the borrower’s account.
The operation of the lease purchase
Tenants spend an average of one third of their income on rent payments. Depending on their activity, this share may vary. For executives it is only 29% while for tenants acting for example, it can reach 36% and up to 37% for an employee. The average rent in France was 631 euros in 2017, an amount that can represent a significant amount depending on the professional activity, hence the interest of making a redemption of its loans.
While it is important to find the best possible interest rate, it is not the most important parameter for such an operation. The goal is primarily to reduce the debt of the home and provide him with more comfort in everyday life and above all a financial serenity. To put the odds on his side, the borrower must submit his last three statements of account. They will not have to report any incident or rejection of the sample.
Whatever the situation of the tenant, he will have to present a solid file, whose most important parameter is the justification of regular income over the last three years. Being a salaried employee on a permanent contract is of course a strong point, but being a tenant in an independent profession or retired does not present any inconvenience. Bankers seek to avoid risk taking, ask for certain guarantees and stability in the professional activity.
The subscriber to the repurchase of credits tenant does not need to provide a deposit or a mortgage. The interest rate of the transaction is fixed and higher than when it is a repurchase of real estate loans. Do not hesitate to compete with different financial institutions and compare offers. It is also possible to keep your bank domiciliation in the same institution without changing banks. The monthly withdrawal will be made directly to the borrower’s bank account.
Lastly, prepayment allowances can be negotiated, as can processing fees. Everything will depend on the remaining term of repayment but also if the borrower uses a broker or a banking intermediary.