Faced with the risk of over-indebtedness generated by the subscription to multiple bank loans or in order to restructure its finances with a view to a new loan, the repurchase of credit is the most appropriate solution. However, if it can be life-saving, this option also generates certain costs that it is important to know and evaluate before launching.
Here is a recap of the costs related to the realization of a repurchase of credit.
Early repayment indemnities
Before consolidating your loans, the organization that buys them back must first repay each of your creditors. This naturally involves prepayment allowances (denoted by the acronym » IRA”) which are added to the total cost of the operation.
As detailed in the Sofinco guides, the Consumer Code governs the amount of IRAs. In particular, it provides in its article R 313-25that this one must not exceed the equivalent of 6 months interest .
Moreover, for a group of real estate loansmore specifically, early repayment indemnities cannot exceed 3% of the amount of the remaining debt. On the other hand, with regard to the consumer creditthe costs to be reimbursed must not exceed 0.5 to 1% of the outstanding capital.
The last rule applies for a mixed credit grouping in which the amount of consumer credit is the largest.
In addition, it should be specified that a previous repurchase of credit can be included in the context of a new operation. In this case, IRAs capped at 1% of the capital remaining due by the borrower are payable by the lending institution.
Like the majority of banking operations, credit restructuring is conditional on the payment of application fee . These can be numbered between 0.5% and 1.5% of the total amount of debts repurchased by the financial institution. This sum should only be paid after the buy-back contract has been accepted and signed by both parties.
Possibly, the debtor can claim an advantage here. Indeed, when the file provided to the bank is well prepared and of high quality, this can go up to reduce the amount of this expenseor, in the best case, exempt the debtor.
Obviously, in the interest of the banking establishment, it is common for this remittance to be made in return for the domiciliation of the debtor’s income in the bank. This makes it a win-win maneuver for both parties.
The new guarantees
Being considered as a new loan, the grouping of credits is subordinated to the provision of new loan guarantees. It can be a mortgage, a Privilege to the Lender of Money or a surety.
The lending institution may request a real security on real estate belonging to the debtor. This mortgage will be used, in the event of non-payment of the debt, to seize the said property for the purpose of reimbursement. Taking out a mortgage, which entails notary fees, can amount up to 2% of the loan amount.
The Privilege of the Lender of Money
Like the mortgage, it is a mortgage loan guarantee. However, unlike the first, this guarantee (often abbreviated “PDD”) can only guarantee old goods. Thus, it only concerns properties that have already been built.
The PDD allows the lender to benefit from a priority right of payment in the event that the debtor finds himself unable to repay his debt and he must seize and resell his property. For a purchase of credits, the PDD corresponds to a range comprised between 0.5 and 1% of the consolidated loan.
In the absence of real estate to put as collateral, borrowers have the option of presenting a surety, that is to say a third party who stands surety for their debt with the lender. Here, two scenarios arise.
If the third party is a relative who stands surety, the borrower has no fees to pay. However, if the third party is more of a guarantee organization, costs (commission and participation in a mutual guarantee fund partially reimbursed) are added. It will then be necessary to count between 2 and 3% of the total loan.
Borrower and brokerage insurance
In addition to the new guarantees, there is a borrower insurance , calculated on the basis of the remaining maturities or the capital borrowed. Its cost must be within a range from 0.18% to 0.7% of the restructured loan.
Finally,brokerage feescan be considered if you wish to benefit from complete support in the necessary procedures.
It is important to take all these costs into account in order to assess the real opportunity to carry out a credit consolidation. The latter are also decisive in the choice of the organization to which to turn for the realization of this operation.
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