What rate for a buyback of consumer credit? – Finance Partners
Many tools are now available to users, to achieve in a few clicks a simulation of redemption credits online. By completing the form and validating it, the user can completely free and without commitment to have access to a display of the proposed rate. Depending on the operation of the tool, he can then obtain a first result of his request and thus, without having to move, he will have the opportunity to get an idea of the rates in force on the market. But above all, he will have access to several offers, which will allow him to choose among those that are best for him, and especially find the best interest rate to realize its purchase of credits.
What is the interest rate of a credit?
In all credit transactions, an interest rate is added to the amount borrowed. It represents the revenue share of the bank or lending financial institution for this money lending transaction. Generally speaking, for a loan buy-back the interest rate is fixed, but it can sometimes be variable, although one can find this case rather in the contracts of certain mortgages. A loan agreement defines from the outset all repayment terms and the nature and percentage of the interest rate. The fixed rate remains unchanged for the duration of the credit, which means that the cost is defined from the outset. The floating rate is subject to market fluctuations, the borrower can make a profit when the rates are low, but be careful when they come back he will take a risk. The cost of his credit, as the amount of his monthly payments are not known in advance.
Two rates are named in the contract, namely on the one hand the nominal rate, ie the interest rate of the credit, on the other the APR, ie the annual rate overall workforce. The latter includes the total cost of the credit, ie all the costs of the credit. They consist of file fees, borrower insurance costs and interest rate. To compare the credit offers received during a simulation, always refer to the APRC, because this is how you can check the total cost of a loan. Another type of rate must be taken into consideration in a loan transaction (traditional or redemption), this is the TAEA which is the effective annual rate of insurance, which is also added to the cost of credit. If this is not mandatory it is still recommended because it protects in case of death, disability and sometimes loss of employment. It will cover the repayment of the credit in these different cases and may also be subscribed in an institution other than the bank that grants the credit.
Negotiate the rate of a buyback of consumer credits
While mortgage loan negotiation is quite customary, things are a bit different when it comes to consumer credit rates. Since they are set according to a “scoring”, ie a rating system established relative to the profile of the borrower, the possibility of trading them is much lower. In the context of a buy back of consumer credit, it will be necessary to ensure the competition to compare the different offers and find the best. Depending on the nature of the project, but also depending on the duration and amount borrowed, the interest rate is different.
Applying to a non-exclusive agent in banking and payment services provides expertise in the field of buying consumer credit. The specialized advisers are present to compare the proposals of the partner financial institutions and therefore have the ability to offer a customized offer according to the client’s profile. The intermediary often benefits from mandates allowing him to propose the best possible rate. For this, it will of course analyze in detail each situation and each file, to find a personalized response to each request.
A rate that varies according to several criteria
Consumer credit is made up of several loan categories, each of which has its own specificities. Interest rates vary depending on the type of consumer credit, hence the importance of making a comparison. The fluctuation of the rate is related to the risk that the bank takes when it lends money. The longer the duration and the larger the amount, the more it runs a risk, which is why its remuneration, and therefore the interest rate, is higher. This mechanism also works in the opposite direction, the shorter the repayment time of a credit, the lower the rate. As for the amount of the monthly payment, it is also defined by the rate, the more important it is, the more important the monthly payment.
The assigned loan is in the consumer credit category. For the purchase of a car or a motorcycle for example, we currently find rates on the market ranging from 0.90% for a repayment period of 12 months, to 3.80% when it reaches 72 months that is, 6 years old. In the case of a personal loan, that is to say a sum of money lent by the bank for a miscellaneous project, and without need for proof, the borrower can currently find rates of 0.90% on 12 months, 1% over 24 months, 2.1% over 36 months, 2.80% over 48 months, 2.99% over 60 months and 4.28% over 72 months.
All these different rate indications are only averages, and in the context of a redemption of credits they can still vary. It is important, before any step, to define your project well, and to decide at the beginning not to stifle your monthly finances, what will be the amount of the monthly payment but also the duration most adapted to the household. The best buyout of credits is not based on the best rate obtained but rather on the financial comfort that it provides to the home.
To benefit from the best rates in effect
It is obvious that to put all the chances on his side when filing his record of redemption credits must be in its best light. Presenting the best possible borrower profile is of course an important asset. This means, for example, impeccable account keeping and controlled financial management. In the case of late payments, bank overdrafts or rejections that are present on the bank statements, it is better to wait a certain period so that they do not appear anymore.
The professional situation of the borrower is a very important parameter for the banks as it defines the income and therefore represents a sign of security for them. A stable job is therefore synonymous with a more favorable interest rate when applying for credit in general.
To obtain good conditions, the borrower has every interest in playing on the duration of its purchase of credits, because it influences the interest rate, as already mentioned above. If the household’s ability to pay back allows it, it is always better to shorten the term of the loan by repaying a monthly installment of a larger amount. The bank or lending financial institution will give a better rate to this configuration rather than a longer repayment period.