When consolidating loans, you usually only think of settling your outstanding loans and lowering your monthly payments. But it is also possible to free up cash, usable in the event of a hard blow. Simple and secure savings. Our explanations and advice.
Credit buyback + cash: how to do it?
To integrate a sum of cash into a loan grouping, it is very simple: you just need to request it from your broker. To do this, assess your debts and receivables exactly to integrate them into your grouping and analyze the situation of your savings. The cash generated by the repurchase of credits will simply allow you to generate a “mattress”, or rather a “parachute” that you can mobilize in the event of a hard blow, without having to take out new loans too quickly, whether acts of personal loans, revolving credits or others.
However, be aware that, in any event, in theory, your broker will offer you, on the basis of his own analysis of your situation, cash adapted to your income, your expenses and correctly sized in relation to your loan repurchase.
A theoretical and practical limit for the cash generated by the repurchase of credits
The extra cash that a loan pool can provide you is not infinitely expandable. And that’s good. In fact, a loan repurchase is not a cash loan: it is indeed a loan consolidation operation.
It is thus generally accepted that the maximum cash limit that it is possible to integrate into a loan grouping is 15% of the total amount of the new loan.
For example, if you wish to buy back a consumer credit of $ 50,000, it will not be possible to generate more than $ 7,500 in cash. If you buy a mortgage for $ 100,000, the maximum cash flow will be $ 15,000 but no one should let you opt for such security cash when buying back loans.
And that’s good! Remember, in fact, that the objective of buying back credits is to lower your monthly payments. However, the more you increase the share of cash, therefore money that is not immediately needed, the more you increase the overall amount of the new loan and thus the overall cost of your loan repurchase. Because the interest rate will also apply on this sum.
Here again, serious brokers adequately size this security savings while some, unscrupulous, oversize it to inflate the loan amount and therefore their fees, which are a percentage of the total amount purchased!
This is why it is necessary to be vigilant, as we specify it in our page entitled “Purchase of credits, the traps to avoid”. Do not hesitate to read our advice carefully before signing an offer to buy back credits.
Why integrate cash into its loan pool?
You may legitimately wonder why integrate cash when you buy back credits. The answer is simple: to create safety savings for you. In fact, do not forget that the repurchase of credits has a single goal: to allow you to clean up your family budget. However, a good budget is a budget that relies on savings.
It is thanks to it that you can face the hard times without having to take out a new loan, which will be able, in fine, to blur the benefits, in terms of monthly payments, of the grouping of loans.