If personal credit is fairly widespread in Switzerland (more than 400,000 contracts in 2014), buying back credit is a less well-known solution. However, borrowers would benefit from better understanding and using this practical and advantageous solution. What is credit consolidation, how to benefit from it, and how much can we hope to save? Infocredit offers you a tour of the question.
What is credit consolidation?
Credit consolidation, also called credit repurchase, very simply consists of grouping one or more commitments in progress:
- Personal credits: the repurchase of credit then consists in replacing your current credit with a financial organization by another credit with another organization, while profiting from more advantageous conditions.
- Credit card balance: It is entirely possible to repay an amount on one (or more) credit cards by borrowing this money. If at first borrowing money to pay off a negative credit card balance may seem unnecessary (borrowing to pay off a loan), be aware that personal credit almost always comes with a lower interest rate than the one charged on the negative balances of your credit cards.
- Leasings: the repurchase of credits can also concern leasings.
A credit consolidation may very well relate to only one commitment, or then to several commitments.
How much can we save?
The question of the savings achieved is often essential for individuals wishing to group their commitments. This will largely depend:
- Commitments to be grouped, and current conditions of these commitments (interest rates charged, etc.).
- Conditions for redemption: duration and interest rate practiced essentially.
In general, we consider that it is easily possible to save up to 40% on your monthly payments ! In other words, an individual who pays 500 USD each month to reimburse his credit, and 100 USD to reimburse a credit card (for a monthly total of 600 USD), could with a redemption / grouping of credits save up to 250 USD / months.
There are also practical advantages to consolidating credits. Beyond the financial question only, the fact of combining its credits allows:
- Simplify invoicing by replacing several monthly invoices with a single fixed monthly payment.
- To re-organize your budget by redefining for example the desired repayment period to save either on the interest paid, or on the overall monthly payment. A credit grouping thus allows to benefit from a clear budgeting allowing to plan serenely the repayment of its loans.
How to benefit from a grouping of credits?
There is no shortage of solutions and professionals in the industry. Infocredit nevertheless recommends that you refer yourself to a qualified professional who will be able to provide you with information. Thus, Multicredit offers, among other things, the possibility of obtaining a free assessment of your situation as well as a free credit buyout offer directly on their page. Other providers are also interesting. In all cases, as with any credit application, you should be wary of offers that are too good to be true, and make sure you can get a free offer.