Getting a cash buyout is no more complicated than getting a “classic” buyout. It is also quite usual to request a credit buyout with a need for additional money because it’s time to pay off all the debts and take control of your budget completely. Since credit consolidation is an important and generally costly operation, you must be vigilant about the methods chosen and obtain a cheap credit buy-back.
The principle of buying back credit with cash
The repurchase of credit is an operation consisting in taking again all the existing loans and all the debts in only one and new credit whose duration will be sufficiently lengthened so that the new monthly payment is adapted to the incomes. Requesting a credit buyout with cash therefore amounts to requesting a “classic” buyout with an additional sum of money to settle specific debts or finance a new project.
In the context of a “classic” buyout, existing debts and credits are directly settled by the credit buyout organization. This is also why it will be necessary to provide proofs of debts and credits in progress to prepare the file.
For the need for additional money for the repurchase of credit with cash, it is generally not requested to justify the need for additional money because it is not necessarily possible to provide it. For example, to reimburse a family debt or to friends, IOUs are rarely formalized. On the other hand, if it is a repurchase of credit with a new project of type works or purchase of car, it is generally recommended to provide a documentary evidence. The more documented the request to buy back loans with cash, the more likely it is to obtain a favorable opinion.
Credit repurchase with cash: general case
Generally, when you need to buy back a loan with cash, it means that you have several credits to take back and a debt or a project to finance. Having reached the limit of bearable debt, it is necessary to rebalance the budget while finding more money.
The repurchase of credit with cash will consist in taking again all the credits in progress (including the real estate credit if there is one) in only one and new credit. This new credit will also make it possible to obtain an additional sum of money without requesting an additional cash credit. The redemption will be offered over a sufficiently long period to obtain a bearable monthly payment. The repurchase of credits generally makes it possible to reduce from 30% to 40% the amount of the monthly payment.
On the other hand, it is clear that this operation will increase the overall cost of the credits. Indeed, in terms of credit, the longer the duration of the credit, the greater the total cost. And this will also be the case for a credit consolidation with cash. It is therefore very important to choose the right repayment period. This is also the reason why the first step of our credit buyback comparator is a cash buyout credit simulator whose duration can be varied widely to be aware of both the new monthly payment obtained and obtain an evaluation of the cost of the operation.
Redemption of a single loan with cash
Credit redemption with cash will not be accepted if there is only one credit to be redeemed. Indeed, the law is quite precise on the subject: the repurchase of credit is intended for the regrouping of at least 2 previous receivables of which a credit in progress. This is article R313-12 of the consumer code. Seeing advertisements claiming to be able to buy back a single loan should make us more than vigilant (Editor’s note: buying back credit is totally different from renegotiating a mortgage).
Redeeming only one loan with additional cash is only possible if there is another justifiable debt to be redeemed.
If you have only one outstanding loan and you need more money, it is not technically possible to go through a loan buyout. But it is enough to ask for a “normal” credit, a personal loan the amount of which includes both the current credit plus the need for additional cash. Of course, the current loan must not be too large, otherwise the file is unlikely to pass. This type of approach is rather reserved for people who have a revolving credit in progress. This type of credit is very expensive for small amounts, it makes perfect sense to want to settle it as soon as possible.
Compare credit consolidation with cash
Obviously, it is essential to compare credit rates before committing. We spontaneously think about it for a mortgage and for consumer credit. We generally think less about buying cash loans, why?
Generally, the repurchase of credit is a situation which one undergoes because it occurs rather following an unexpected difficulty which unbalances the family budget. The urgency is often to find a financial solution. In this oppressive situation, we are generally happy to be able to get out when an organization provides this solution.
Obviously, it is good news to find an organization willing to make a cash buyout at a difficult time. But if an organization is ready to finance the file, why not a second one? There are enough credit consolidation companies to keep competition to a minimum. Moreover, beyond even playing competition, it is recommended to file at least 2 files, even 3 files, so sometimes it is difficult to obtain an agreement. But if it is ever possible to obtain several offers, it would be a shame to spend more for the same cash buyout. And when you write “spend more”, it can be much more. It suffices to make the observation.
Take the example of a credit buyout with cash of $ 40,600: $ 30,600 of credit to be redeemed and $ 10,000 of cash. This example corresponds to the average amount of credit repurchase and cash. The average duration of funding is 10 years in this case.
Between these two offers of credit consolidation with cash, there is a gap of around 1000 $ for exactly the same. Obviously if the repurchase of credit with cash relates moreover to a mortgage, the amounts involved will be even more important and therefore the interest to compare is even greater.