No, the repurchase of credit is not a miracle solution: if it avoids the indebted household to dive into the over-indebtedness, it owes it to a rescheduling of their current loans. Grouping your loans offers breathing in the daily budget thanks to a single monthly payment and an increase in the repayment period, a lever that reduces the amount of monthly payments .
A solution to over-indebtedness
The grouping of credits has a primary virtue: to prevent households in difficulty from sliding into over-indebtedness . An inextricable situation where the level of repayments does not allow to complete its monthly budget. This occurs when credits accumulate and / or collide with a decline in income, for example as a result of job loss. We then speak of a vicious circle, where the debt causes the debt, by the game of agios for example. Faced with this financial distress, it is necessary to react as quickly as possible by attacking the root cause: the repayment of debts.
The duration to resolve the emergency
Auto credit, home loan, revolving credit: to finance large purchases, you often have to go into debt when you do not have enough cash. It is the accumulation that can put you in a situation of fragility, when the level of debt approaches or exceeds 50%. In this case, you no longer have a reserve when a hard blow comes, with a drop in income or a large bill to pay.
The repurchase of credit represents then a relevant solution on both the short and the long term. In the short term, consolidating its loans makes it possible to immediately reduce the amount of monthly repayments, which gives the room for maneuver necessary to complete its budget. In addition to loans, credit redemption can even include debt (unpaid rent, large bill) or additional cash.
In the long term, it is the duration of the loan which is lengthened to authorize this “rescue”: the establishment which carries out the repurchase of credit stagger the duration of repayment to adapt to the situation of the borrower. It also adjusts the interest rate, which can nevertheless benefit from a more favorable economic situation – as it is currently the case – to be down, especially if revolving loans (at high rates) are part of grouping.