Published on : 27 December 20194 min reading time
When you have some money problems, you can opt for various financing solutions such as credit consolidation for example. This is an excellent alternative for all your financial problems. Credit consolidation is the possibility of benefiting from a single credit for a borrower who has difficulty meeting his commitments. Indeed, this solution makes it possible to have a much reduced monthly payment. On the other hand, more often than not, the repayment period increases and you will have a slightly higher total cost of credit. However, this is not always the case. It’s up to you to study the question carefully. Don’t neglect this option if you find yourself in financial difficulty. But in concrete terms, how does credit consolidation work and what are the necessary steps?
How a credit pool works
A credit pool is a new credit pooling many loans. It is considered as a simple classic credit. The first step is to submit a credit consolidation application. Depending on your professional, financial and real estate situation, you will be offered different conditions for credit consolidation. Credit consolidation can be for people who want to enjoy financial independence. In fact, credit repurchase helps balance the borrower’s budget. It also allows you to avoid going through too complicated a process.
Steps to take
To apply for credit redemption, you must apply to a financial institution such as your bank or approach your broker. This consists of providing various information such as; your income, your number of outstanding credits, whether you are a tenant or owner, etc.
On the one hand, if you make your request to a bank, you should know that credit redemption is not necessarily within the remit of your advisor. On the other hand, if it is a product of your bank, your bank advisor will surely be able to respond correctly to your requirements and redirect you to the right branch. On the other hand, if it is with a broker, your application will simply be made on the Internet. The information you provide will then be used to analyse the feasibility of the transaction. Among the most important criteria are the debt ratio before and after the credit consolidation you wish to benefit from.
In fact, if the operation seems profitable for the borrower, your file will be able to go through the following steps. Note that the borrower must be perfectly familiar with your file to determine whether or not you are entitled to it via a credit repurchase simulation.
The simulation, approval of the application and release of funds
The credit simulation buyback consists in analysing the interest of the transaction. This simulation is also used to quantify the total cost of the new credit down to the last detail. The documents required beforehand vary according to the complexity of the file: proof of identity, domicile, housing, income, debts, bank account, outstanding loans, etc.
Afterwards, if the various financial institutions or brokers accept your application, you will now have the choice between several credit consolidation offers. Then, simply choose the one that suits you best. You choose among the offers you have received. Note that the goal is to choose the one that corresponds to your needs and expectations. In fact, you are bound to find an offer that is less expensive than the others, an option that will attract your attention. In this case, pay attention to the parameters of the credit repurchase, you must study them properly. Take well into account the total cost of the monthly payments, the duration of repayment, the possible expenses if there is a case of early repayment, etc. You should also be aware that you cannot accept an offer immediately. There is a legal cooling-off period of 14 days.
You finally move on to the release of the funds after final approval of the offer. In reality, the bank that holds your new credit will take care of repaying all existing credits. All in all, the credit consolidation transaction takes a minimum of one month to go from the first step until the funds are paid out. All of these steps are essential in order to be able to benefit from a credit repurchase.