Buying back credit with cash is an opportunity and a windfall to free up resources while reducing monthly loan payments. In fact, when a household’s borrowing costs exceed 50% of its income, the situation becomes complicated. The future is somewhat bleak, especially if there are plans to finance any kind of project. But before we go any further, let’s get acquainted with the mechanism of credit repurchase and the cash envelope loan.
Getting to know credit repurchase better
The objective of a credit repurchase is to reduce the monthly repayments to be able to restructure one’s budget. Indeed, it intervenes by less heavy monthly payments perfectly suited to the customer’s profile. However, the repayment period is longer.
Credit repurchase or debt consolidation is a way to get around over-indebtedness. To this end, it offers a solution to deal with the complexity of payments on loans previously taken out. The borrower asks a bank to repurchase all or part of its outstanding loans. The bank then negotiates with the borrower’s former lenders. After negotiation and acceptance, the organization will replace the old loans with a completely new one. It will be subject to more interesting conditions, for the amount of the monthly repayment, the number of maturities, and the duration. In this way, the consolidation of debts has made it possible to merge the different loans into a single loan. But it also made it possible to benefit from a monthly payment adapted to the borrower’s capacity
The new contract may also include a cash envelope loan. This can be requested to guard against financial difficulty. It is a kind of additional credit. Thus, if the rate of indebtedness no longer allows to take out a loan, the credit repurchase is the best alternative to obtain it.
Operation of the loan with a cash envelope
Unlike a traditional bank loan, a credit repurchase allows you to foresee possible future financing needs and to be able to face exceptional expenses. The principle of this cash envelope loan is quite simple. Its amount is capped at 15% of the total repurchase. However, in certain cases, it is possible to obtain a larger amount.
The cash envelope can be used to bring a sustainable balance to the borrower’s financial situation and income. In the immediate term, the borrower can also use it to pay off an overdraft, for repairs, to prepare for a wedding, etc. There are two types of treasuries. The first is called “free” because it is not attached to a well-defined project. Thus, the borrower can use it as he or she sees fit. The second type is an earmarked amount. The grant requires the issuance of a supporting document such as an invoice, estimate, or other. The request for cash is to be concluded at the time of the signature of the credit repurchase agreement
The borrower will reimburse the cash envelope throughout the duration of the repurchase in a single amount of the reduced monthly payment. Indeed, the envelope will be integrated into the total amount of the pooled loan. It should be remembered that this additional credit also benefits from the same rate as the credit repurchase. Then, it is also necessary to be aware that some banking institutions do not hesitate to propose a revisable rate for the repurchase of credit. The case occurs, especially for a risk profile.
Advantages of loan repurchase with cash demand
For an individual facing a case of repeated overdrafts, it is up to him to react very quickly by looking for a specialized broker. The latter must be able to take charge in a record time of the search for a repurchasing institution. Only, the file is received in submission for analysis if the holder does not have a bank record or if the debt ratio does not exceed 50%. However, in such cases, credit repurchase is possible if a person can guarantee the loan repurchase. It is also feasible if the applicant is in a situation of access to a property
Once the loan repurchase with the cash request has been made, it gives the benefit of a renegotiated rate for the loan repurchase and a longer repayment period. Savings are also achieved by paying reduced one-time monthly installments. Besides, it is possible to realize projects with new financial autonomy. The new income will allow better budget management. It will avoid getting into debt again. It is also expected a new recovery of its finances optimally. Indeed, adding the amount of cash to the loan repurchase agreement is an ideal solution to build up precautionary savings.
Finally, requesting cash also allows you to avoid all the costs associated with taking out a new loan in addition to your loan repurchase. For example, if you have a project to renovate your home, it is possible to integrate it into the supplementary cash flow envelope. The amount would be equivalent to the cost of the work to be done. In such a case, the loan buyback is used as a tool to enhance the value of your real estate assets, while benefiting from a reduction in the monthly payments to be made.
Particularities of credit repurchase with cash
The new money made available to you in addition to the total amount of the various loans to be refinanced can be freely allocated to a specific project. It is up to you to determine the amount according to your needs. If the cash is not earmarked for a particular expense, you can use the amount without providing the lending institution with proof. However, if the cash is earmarked, the lending financial institution will require documentation to support its use. It is also possible that the cash may be retained and not used as a precautionary measure. This ensures that the necessary cash is on hand in case of unforeseen circumstances.
In practice, the amount of cash is capped at 15% of the total amount of your loan repurchase. Credit repurchases in the form of mortgage loans offer borrowers the possibility of having access to more cash than a personal loan. In fact, the amount can be up to 60,000 euros without requiring proof, whereas personal loans are limited to a maximum of 20,000 euros. For the purchase of credit with cash, it is possible to obtain more. However, you will have to justify the allocation of the request to the bank.
Conditions to benefit from a credit repurchase
Normally, access to a credit repurchase is open to everyone. The only exception for non-access is for files to the over-indebtedness commission. However, the banking conditions are required to revolve around professional stability, the absence of banking incidents, and a debt ratio that meets the standard
It should be remembered that, exceptionally, a bank may grant a request for debt consolidation from a person with a bank record, a household with a 60% debt, a TNS (self-employed worker) who does not have a stable income or an invalid, etc. These criteria can therefore be revised. This is done according to the case of each applicant and the guarantees he or she can offer. In this regard, the applicant can contact professionals in the field. Indeed, most of the time, they offer an objective and free study of the debt situation of a person or a household. They can also propose an effective solution if the project is feasible.