Have you already purchased a loan and want to request a second one from your bank or a competing bank to avoid the situation of over-indebtedness? It is possible! Indeed, a borrower can redeem his loans as many times as he wishes if he judges that his financial situation still needs to be balanced. How does a second loan buy-out work? All the answers to your questions are in this folder!
Second loan buy-back: principle and operation
Whether it is a first or second repurchase of credit, the principle of the operation remains the same: to redeem its current loans from the bank, which will proceed to an extension of the duration of repayment. However, who says extended duration says lower amount of monthly payments. The borrower thus sees his financial situation significantly improved.
Please note, this is not a question of making a credit buy-back in parallel with the first, but indeed of redeeming the initial combination again. In the meantime, perhaps the borrower has taken out other loans? These may well be included in the second buyout. In such a case, it is even the idea of such an operation! In addition, of course, to benefit from better credit conditions (lower borrowing rates, non-existent prepayment fees, etc.). Depending on his situation, the borrower may also obtain a new loan, which the bank will attach to the credit consolidation.
Avoiding the risk of over-indebtedness: the great purpose of the credit buy-back
By reducing the amount of their monthly payments via a second loan repurchase, the borrower automatically sees his debt ratio decrease. Debt restructuring (another name for buying credit) therefore not only increases the purchasing power of the borrower, but also and above all bypasses a possible situation of over-indebtedness.
Good to know: the difference between debt and over-indebtedness
Debt and over-indebtedness are two very distinct concepts. We talk about debt when a borrower has one or more debts to repay. Over-indebtedness, on the other hand, refers to one’s financial situation: it is said that a borrower is over-indebted when faced with excessive debt.
Credit consolidation: one operation, two formulas
Depending on the types of credits to be repurchased, the bank can offer one or other of these credit repurchase formulas:
- Redemption of consumer credit: it consists of buying back two or more consumer credits (personal loan, revolving credit, etc.).
- The repurchase of mortgage: the bank will in this case buy back at least one consumer loan and one mortgage.
Total cost of the second loan buy-back: how to calculate it?
For a second repurchase of consumer or real estate credit as for a first, the borrower will have to make sure that the operation is profitable for him. This is the ideal scenario. With this in mind, he will have to observe the total cost of the combination on the bank’s offer. And this is the APR (annual effective annual rate) which will reveal it! This rate indeed includes all loan costs (nominal rate, insurance, administration fees, etc.).
No calculation to do, therefore. It is sufficient for the borrower to compare this rate with that shown on the current consolidation contract. In the case of loans contracted between the first and second repurchase, it will simply be necessary to calculate the average rate to make the comparison. Simple but effective!
Second repurchase of credit: the keys to see your file accepted by the bank
If a second loan repurchase (and even a third, a fourth, etc.) can be freely requested by the borrower, the latter will nevertheless be required to respect a certain period before making his request. Indeed, the bank will only accept its file if the previous credit consolidation was carried out more than a year ago.
Then, the acceptance conditions for a second grouping of loans do not change: no filing at the bank, payment incidents, etc. And if the borrower has one or more guarantees (life insurance, mortgage property, etc.), it’s even better!
A loan repurchase agreement does not necessarily include borrower insurance, even if the bank were to require the borrower to insure his loan. The Hamon law in fact gives the right to insurance delegation. Concretely, if the bank carrying out the grouping of credits offers insurance to the borrower, the latter can refuse it, especially if he finds it cheaper elsewhere! His insurance contract will then be subject to separate monthly payments.
Now that you are well informed about a possible second loan repurchase, all you have to do is compare the offers to find the best rate! By having your loans redeemed, see the future more serenely. Fixed and advantageous rate, constant monthly payments, repayment duration ranging from 6 to 84 months, free early repayment whatever the amount of the buy-back, fair and clearly displayed costs … With us, debt restructuring has only good surprises in store!