The repurchase of payday loans, also called group of loans, makes it possible to face a difficult financial situation, when the budget of the household is unbalanced by too many credits. The objective of the transaction is to find a new creditor, who will take over the redemption of all current monthly payments, in order to propose a new single credit agreement. All consumer loans can be included in the financial package, including payday loans, revolving loans and conso, but also personal and tax debts. An additional amount of cash used to fund a new project can also be included in the project.
The benefits of payday loan buyback
When a borrower is in difficulty to repay his monthly payments, the purchase of payday loans is an opportunity to seize, provided you know the ins and outs of such a process. This is a real banking operation, with its conditions, obligations and fees. The goal is to reduce the monthly repayment, in order to achieve it, the lender automatically offers a longer credit period. This action increases the total cost of the new credit put in place. However the redemption of credits benefits from many advantages among which one could quote:
- A simplification of the management of his personal finances because the household will only have to reimburse a single monthly payment of credit. This will be levied every month on a fixed date, while the borrower will have only one bank interlocutor to manage. All this means: saving time, efficiency and savings on bank overdraft fees.
- A debt ratio that decreases because the reduction of the monthly payment will have a real impact on it. Set at 33% average by banks and financial institutions, the reasonable debt allows the borrower to find a capacity for savings or even borrowing.
- The negotiation of the new interest rate for the new single loan. This is one of the main objectives of the credit buyback, namely to take advantage of the generally declining interest rate trend to buy at a much more attractive rate the old payday loans or even revolving loans that had much higher interest rates. high.
- Avoid over-indebtedness because with loan consolidation an excessive debt situation can be solved. All outstanding credits are raised to lower the monthly financial burden of credit and free up purchasing power.
- The cost of borrower insurance can also be lowered. With a single credit set up by the lender, the borrower can save money.
For the successful completion of a payday loan buyback
If the repurchase of payday loans is a financial tool presenting many assets, it is also an opportunity which one must seize with care. The extension of the repayment term is an action that will increase the total cost of credit, while on the contrary the reduction of it will reduce it. Some borrowers also take advantage of the repurchase of payday loans to increase their monthly payment, in order to lighten the costs related to the cost of this one. A second important point to raise is that the redemption of credits involves a number of fees to be taken into consideration. The first category of these charges consists of prepayment allowances which are specified in any credit agreement in general. Then come the brokerage fees, the fees and the guarantee fees ( mortgage or deposit). It will therefore be necessary to ensure that all these costs do not affect the profitability of a repurchase transaction.
To carry out such an operation in the best conditions, it will be necessary to ensure certain important criteria:
- Do not systematically call a broker, because even if it represents a great help for all the steps and it also saves money, the commission costs it generates are not the least. Sometimes a direct negotiation with his bank can also suffice.
- Make a comparison of all offers accurately and taking the time to check all the parameters. Sometimes a low rate hides expensive borrower insurance and it is not always the most important in an application to buy back credits. The APR is the main element that indicates all the costs in their entirety.
- Be attentive to proposals that are too enticing and be wary of extra cash as they increase the total amount borrowed, hence the cost of credit and its duration.
- Be careful about the terms of the credit agreement, and try to avoid costs at best. For example, you need to be able to make an early repayment while removing the prepayment benefits in the contract.
How to redeem payday loans
Concretely the redemption of personal credits takes place in several stages, the first being the demand in itself. It consists in contacting his bank or several financial institutions to submit to them his wish to carry out such an operation. During this stage, the borrower will have to provide general information on his personal situation (marital status, number of dependent children, etc.) and professional status (income, work contract, etc.), as well as the details of his credits in progress. The borrower can also at this stage ask for the help of a broker who has a network of important banking partners, which will facilitate the process, will save valuable time, but especially will give access to the best offers of the market.
The second step is the analysis of the request by an advisor who will define the feasibility of the project. He will pay particular attention to the debt ratio and of course the rest of the household. As a good analyst, he will also be able to estimate if it is profitable for the borrower, depending on his situation and the redemption of credits he intends to perform. He will then give his approval for the request to proceed to the next step, namely the mounting of the file. For the latter, the applicant must provide all the supporting documents requested according to the complexity of the transaction: the identity documents, proof of residence, income, tax notice and tax of housing or land, statements of all bank and savings accounts, if applicable, all amortization tables of all loans in progress, receipts for other debts. All these elements make it possible to establish the solvency of the borrower because the lender will take no risk and will protect himself to the maximum. This step can sometimes include a search warrant, namely that the borrower authorizes the lender to contact credit providers on behalf of his client.
The last step in buying payday loans is the validation of a contract proposal among the offers received. Attention, however, to ensure an important point: the cheapest offer is not necessarily the most advantageous. It is important to know what your needs really are and it is the set of all the parameters that must be taken into account before deciding. The legal withdrawal period is 14 days once the contract is signed. After this period, the funds are released and the lender will reimburse all existing credits.