Credit repurchase: a new decree for more transparency

Because the operation of buying back credits ultimately amounts to contracting a new credit encompassing all the others, the legislator wanted to regulate its use for better information for consumers.

An inventory now compulsory

An inventory now compulsory

As of October 1, 2012, a decree completes the consumer code by imposing better information on candidates for the repurchase of credits. Because if the fact of grouping all its loans under one and the same line of credit has many advantages, among which is the sometimes considerable reduction in monthly payments, the operation nevertheless amounts to taking out a new loan. It is therefore essential that consumers are able to contract such offers with full knowledge of the facts.

Henceforth, and even before the loan offer is issued, the lender proposing a loan repurchase will have to draw up an information document containing, on the one hand, all the elements of the loans in progress and the debts to be grouped, and on the other hand all the characteristics and obligations that would arise from the new consolidation loan. This document should enable the borrower to assess the interest and the scope of the loan buyback operation.

Comprehensive information for better comparison

Comprehensive information for better comparison

Concretely, it will be a table presenting for the left part the loans and debts in progress from the elements and documents provided by the borrower, and for the right part the offer of the lender in charge of the possible regrouping of credits. However, if the borrower is unable to provide all the elements necessary to establish this table, article R313-14 of the consumer code stipulates that the lender must indicate on the information document ” mentions which could not be completed “and warn the borrower” of the financial and practical difficulties he could encounter if he nevertheless wished to continue the operation without knowing all the parameters “.

This document will also have to identify the inevitable changes that would occur in the event of loan repurchase, and in particular the loss or benefit of certain guarantees, or even the obligations in terms of specific insurance. Indeed, it is rare that the insurance contracts taken out to cover the redeemed credits can be continued, and the borrower will therefore have to take out new ones. Likewise, the lender is entitled to ask for guarantees to grant the grouping of credits (surety bond from a relative, mortgage on a property, etc.).

Finally, the information document must detail all of the steps to be taken as well as the different dates on which the borrower will stop repaying his old loans and where his new monthly payments will start. In this way, the borrower should be able to more easily compare the various loan buy-back offers made to him.

 

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