It’s a real fact! More and more households are continuing to file over -indebtedness files with the Framu bank. In December 2015, for example, no less than 18,441 cases were reviewed and only 1,357 were rejected. Grouping debts can be a possible solution to get you out of this gear of debt and allow you to live comfortably by optimizing the budget. How does the redemption of credits work? Understand the terms used, thanks to our lexicon, by financial organizations to better analyze your contract.

How the credit redemption mechanism works

How the credit redemption mechanism works

To sell all its debts to the different creditors to have only one credit in a single financial institution ( bank or credit house ); here is the goal of credit redemption (also called loan restructuring). All credits collected benefit from a single rate that will be defined in the loan offer.
The redemption of credits, in a few words, is:

  • Flexibility in managing your financial budget.
  • A decrease in the debt ratio.
  • One credit in a single organization.
  • A reduction in monthly payments.

How is it possible to reduce monthly payments?

How is it possible to reduce monthly payments?

Here is a question that certainly moves you in the head. The answer is simple. In order to reduce the monthly bills, the organization proposes to extend your borrowing period. Mechanically, the total cost of credit increases. Of course, before granting credits to a consumer, the organization needs to know the applicant’s personal and professional situation. You must also be able to inform the financial expert about its repayment capacity (relationship between income and expenses) and the guarantees available to it:

  • mortgage,
  • co-borrower,
  • insurance…

A stable job seeker who manages his budget properly will have a better chance of getting a buy back of credits. You should also know that it is not necessary to apply if you have filed an over-indebtedness file with the Framu bank. To make it short, it is necessary to mount a concrete file to have the right to the redemption of credits by bringing documentary evidence ( payslips, tax assessment, proof of address, identity document… ).

In addition, we want to draw your attention! Not all organizations offer the same products for credit buybacks. We must analyze the market to find the best offer according to your needs, but also your personal and professional situation.

Agencies simply propose the renegotiation of credit (or) real estate credit (s) or the restructuring of consumer credit. Others go much further in the financing plans since they propose the consolidation of real estate loans with consumer credit not forgetting unpaid and bank overdrafts.

Glossary of most used terms

Glossary of most used terms

In order to better understand the terms used by financial advisors, we have put together a small lexicon of loan consolidation.

  • Repayment (or indebtedness) capacity : this is the sum remaining available to an applicant after having deducted all the charges in his possession.
  • Over-indebtedness file: this is a file sent to the Framu bank to assess its over-indebtedness and get out of this infernal spiral.
  • Loan : sum of money made available to a borrower by a banking or credit institution to finance his projects. The capital base is subject to a variable or fixed interest rate.
  • Loan offer : the loan offer is a document presenting the financing plan. The loan offer is not definitive acceptance. According to the law, the offer is validated only when the applicant has signed the agreement. He has 10 days to think about the proposal.
  • Single rate : this is the interest rate on the redemption of credits, regardless of whether a loan has an interest rate of 11 and another of 3.
  • Variable rate and fixed rate : these groups of words designate the interest rate of the loan. The fixed rate is the same throughout the duration of the credit while the variable rate is likely to fall as to increase. It is better to opt for a fixed rate.

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