Loan consolidation: 4 things to know before applying!
Characteristics of the consolidation of loan
For a person who has had to borrow several times and is therefore often forced to face relatively high monthly charges, the loan buy-back of a transaction that involves the consolidation of all such loans by an institution . As a result, once the transaction is completed, it has only one monthly payment and its monthly debt often becomes more bearable .
The solution is also interesting for someone who wants to increase their borrowing capacity, for example to make a rental investment in order to improve their future retirement . Given the prospects for pay-as-you-go pension plans, this specific benefit needs to be carefully assessed. However, you can also take advantage of the additional savings capacity that will result from the buyout of a loan by subscribing to a which also provides a tax benefit.
In addition, recourse to this solution is recommended if a person finds that it is difficult to repay punctually its loans and in particular if its monthly debt exceeds 33% of its income . Indeed, it is better to do this operation as soon as possible to avoid any worsening of the situation.
Finally, if the loans to be bought back include a home loan, the borrower can take advantage of the current level of rates that are very low . However, an additional cost must be provided if the duration of the loans is extended.
The conditions to be fulfilled for a loan surrender
The borrower or the couple of borrowers must have in the first place revenues reaching less than triple the monthly installments of the future loan . It is therefore necessary to start with a simulation using the calculators available on the Internet to check if this is the case. Indeed, the consolidation will be refused if this condition is not respected. To calculate the repayment capacity, the loan institution takes into account the rent if the applicant is a tenant and possibly other current expenses such as alimony to be paid to the former spouse. It also takes into account the total income of the applicant, namely his salary as well as any other income.
On the other hand, the consolidation of loan is granted in principle only to people who are not registered in the Banque de France’s personal loan incidents file and who are not subject to a ban. to issue checks . If the applicant is registered , he or she may have a great deal of trouble obtaining loan consolidation. In this case, it is in his interest to start by contacting an association for the help of the over- indebted people to know how his problem could be solved. But the transaction can only be considered if it has real estate on which a mortgage can be registered and if it can show that its future income will be sufficiently stable.
Finally, if a home loan is included in the loans bought back, the loan institution will require the subscription of a life insurance-incapacity for work . It will therefore be necessary to complete a health questionnaire and have a medical examination if the amount of the loan exceeds a threshold set by the insurer.
Debts that can be redeemed in connection with a loan surrender
A loan surrender can first include all types of bank loans , namely: personal loans, loans that have financed work or purchase a car, bank overdrafts , home loans and revolving loans. Given the fact that loans of this type are very expensive, it is advisable to redeem them to avoid over-indebtedness .
In addition, it is possible to include in a loan consolidation a debt that could not be paid on the due date for example due to illness or divorce .
Preparing a loan consolidation request
A person who wishes to redeem loans must start by preparing copies of all the following documents:
– his last three payslips (and possibly those of his spouse);
– statements of all his bank accounts for the last quarter preceding the application;
– amortization tables of all loans in repayment;
– his last three income tax notices;
– proof of address ;
– a copy of the act of purchase of his dwelling if he owns it .
After having prepared these documents, you must make a call for tenders with the loan agencies or use the website comparerrachatdeloan.com to benefit from the most advantageous conditions.
It may be wise to use a loan broker . Indeed, this professional will be able to examine the situation of the applicant and to present him the solutions which seem the best adapted to his case. On the other hand, brokers often obtain more advantageous terms than those offered to individuals who contact the banks directly.