The new loan is used to pay off your debts, then you repay it to the lender rather than spreading your payments among your creditors. But one question remains: what about credit insurance if you decide to redeem your credits?
The operation of the credit redemption
Here are some frequently asked questions about credit redemption.
What is the credit buyback?
Also called consolidation/credit consolidation, the credit redemption allows you to transfer all the credits you have on a single loan. Debt consolidation is the case where a person gets a new loan to pay a number of loans, debts or smaller bills.
In doing so, she gathers all these debts in a single loan combined with a monthly payment. A buyback of credit. Allows credit for s and other receivables in the new credit. In reality, it is technically impossible to combine loans and merge them. Each loan has its own interest rate and repayment terms. Each of them is essentially a contract where you borrow money and you then commit to repay it over a period of time with fixed payments.
So, to combine or consolidate the debts, you must actually get a new larger loan, and then use the money from the latter to repay all the small loans that you want to consolidate. In the case of credit redemption, it is possible to redeem the loans against a new and cheaper loan.
How to buy credit?
People redeem their credit for a number of reasons:
- This simplifies their finances. Instead of having many debt payments to pay and pay on time each month, they now have one.
- This can save them money by lowering their interest rate (provided you can get a new low interest rate loan).
- This can simplify their lives with a lower monthly payment. This may be true if you consolidate at a lower interest rate or if you have a longer period of time to repay the loan.
- This can pay off the debt faster.
Borrower insurance in the event of a buyback of credit
If credit is bought back, the loan agreement ends and so does the credit insurance if it was taken from the lender. But if the insurance has been taken out with another establishment, it will be necessary to announce to him the project of redemption.
Two solutions are then offered to the borrower: the termination or renegotiation of the insurance contract. The important thing is to find a formula with more extensive guarantees, lower monthly payments or better repayment terms.