The repurchase of credit becomes more and more common because it turns out to be the most appropriate solution to alleviate the various financial problems. Indeed, with this kind of contract, the borrower breathes new life into his budget and can even finance any project, or have more cash. This is a contract which consists of grouping together all the borrower’s current credits to form a single and unique loan. The money will be used to repay the various outstanding debts, and the borrower will only have one creditor, the one who accepted this refinancing. The latter is characterized by a spreading of the duration of the repayment in order to reduce the monthly payment to be paid. Certain conditions must be met in order to benefit from this type of contract.
The applicant’s situation
Certain legal standards governing credit institutions must be respected to be granted a loan buy-back. The elements that are generally checked are the borrower’s situation, his repayment history, the guarantees and his solvency. Other criteria may be added depending on the credit institutions.
Only adults in full possession of their faculties and their civic rights can obtain this type of financing. The repurchase of credit cannot be granted to victims of incapacity, to couples in the process of divorce, to foreigners with diplomatic immunity, to foreigners holding a temporary visa and to companies in the form of SCPIs, SARLs, EURLs and SCIs.
Credibility and solvency
The criteria considered, in order to assess the credibility and solvency of the borrower, are similar to those required when applying for a traditional loan. A solicitor is eligible when he benefits from a permanent professional situation guaranteeing him stable income over the long term, in particular during the redemption reimbursement period. The work certificate mentioning the seniority of an employee is the document that can justify the security of his job. Other sources of income must be verified by the related documents, such as the lease for the rents collected. All these documents are to be provided when requesting a loan buy-back.
The amount of income must be sufficient to support the monthly repayments until the end of the contract. Social benefits, proof of property income and payslips can confirm cash receipts. The calculation of the debt ratio is based on this income. Normally, an individual’s debt threshold is 35% of net income. The costs of the person concerned added to the value of the reimbursement must not exceed this 35%, otherwise the risk of over-indebtedness is imminent.
Credit agencies take these criteria into account when studying applicants’ files. The charges that may be included in this debt threshold are alimony and rent. However, credit organizations are free to set the bar as they wish. Thus, some derogate from these rules and can give a favorable agreement even if the debt of the applicant goes beyond 35%. In this case, they mainly refer to the value of the sum remaining available.
Certain sums can be added to the applicant’s monthly income and increase his chance of obtaining a loan buy-back. These are the family allowances received, the alimony and the average of the last 3 balance sheets for the income from a self-employed activity.
Payment incidents and the financial situation
The applicant’s financial situation is also analyzed by the credit agency. In general, people who have been the subject of a payment incident cannot obtain a repurchase of credit. Their filing at the Banque de France is synonymous with major financial problems since it means that there has been an abusive use of a bank card, a failure to pay credit installments, a systematic overdraft and unpaid bills.
The exception confirms the rule since owners registered with the Banque de France can always claim a redemption. The latter can put their real estate as collateral for the repayment of their loan.
The repurchase cannot be attributed to individuals who are the subject of a banking ban for various causes (rejection of check for example), that is to say those who are on file with the FCC.
You should know that the redemption can be made each year, that is to say on the anniversary date of the previous contract.
Credit agencies are often flexible as they consider changes in life expectancy. However, they can be cautious for seniors if the repayment term goes beyond their 90th birthday. In addition to the age criterion, the banks examine the resources of retirees in order to properly assess their eligibility. In any case, you should always contact your bank advisor for professional advice.
Read also: Credit redemption: list of documents to provide