It is easy to contract several simultaneous loans, and repaying them presents little difficulty most of the time, except that in the event of a drop in income, debts can become difficult, if not impossible, to repay. It is then necessary to consider restructuring its debts. But what is loan restructuring, and how does it work?
What is loan restructuring?
A loan restructuring is an operation that consists of grouping all your credits into one so that you only have to repay a single loan whose monthly payments are lower. Credits are bought back by a financial institution. All loans are likely to be redeemed: real estate, car, consumer loans, overdrafts...
How does loan restructuring work?
To set up a loan restructuring, the financial institution will ask to put together a file including the following:
A copy of the identity card
photocopies of all monthly income
photocopies of the last three months’ bank statements
A copy of a housing certificate or an occupancy title
Copies of monthly payments still due to creditors
Sometimes copies of tax and non-tax notices as well as an employment contract.
Once the file has been accepted, the financial institution will propose a reduction in the maturities so as not to exceed the debt ratio. This rate is set at one-third of what the borrower must repay. To do this, debt reduction will take the form of lower monthly payments or a lower repayment rate.
What are the benefits of loan restructuring?
The objective of loan restructuring is to reduce the weight of loan charges by reducing the monthly payment. The reduction in the monthly payment can reach up to 60% of the cumulative monthly payments grouped within a single credit. A loan restructuring has several advantages, such as:
Reduce the debt ratio to improve the rest of your life.
Avoid a situation of over-indebtedness and ultimately file with the Banque de France.
Regain purchasing power to finance a new project.
Simplify budget management with a single point of contact and a single direct debit.
Get some extra cash.
Negotiate better credit terms with a single lower interest rate.
How to find a loan restructuring offer?
Traditional banks, online banks, or specialized credit organizations offer debt consolidation. However, finding a loan restructuring offer can be complicated, given the different players on the market. A broker is a great help for any new borrower or borrower who has taken the time. This expert has a wide network of partners that allows him to negotiate the best solution for his client.
In addition, he advises and offers personalized support, from setting up the file to signing the contract. Borrowers wishing to conduct their own loan restructuring search can use a free, no-obligation online comparator. Anyway, before embarking on the search for a financial institution, it may be wise to perform a simulation. With a dedicated online tool, the simulation gives a free and non-binding overview of the feasibility of its project. The borrower gets an idea of the terms of the loan restructuring that he can implement, namely:
The nominal rate, the APR, and the TAEA.
The amount by which monthly payment is reduced.
The duration of the new credit.
The overall cost of the restructuring.
The debt ratio before and after the merger operation.
To conclude, a loan restructuring offers advantages, the main one being the reduction of the monthly payment compared to the accumulation of the previous ones in order to increase its financial capacity. The counterpart is an extension of the repayment period of the new loan and, ultimately, of its overall cost.
Are you currently repaying too many credits, your monthly payments are too high, and your end-of-the-month is difficult? Visit recashloan.com to find the ideal loan restructuring solution. Find, in less than 5 minutes, the best buyback offer for all your credits, whether consumer or real estate.