Over the years, needs and desires, consumer credits can accumulate up to the tolerated debt ratio of 33%. But when income drops sharply – following a layoff, for example – this figure skyrockets and it is the household budget that is weakened. Sometimes we can therefore consider a grouping of credits to settle debts and have lower monthly payments each month. Example with Nathalie and Alexandre.
The couple’s situation
A new car, a motorbike as a second vehicle, a honeymoon … Little by little, Nathalie and Alexandre have taken out three consumer loans which weigh heavily on their budget. Nathalie and her husband Alexandre still received $ 3,900 in income … before the loss of an additional activity for the gentleman, which brings the monthly admissions to $ 3,400. Until they finally become owners, they rent an apartment for $ 750 per month. However, they both have a stable situation and wish to find a breathing space in their budget by reducing the burden.
The monthly payments before the repurchase of credit
The three consumer loans, including a car loan, a motorcycle loan and a personal loan, represent monthly payments of $ 575 for Nathalie and Alexandre. Added to the rent, this sum brings the monthly charges to $ 1,325, or 39% of their income. A threshold higher than the rate of 33% normally tolerated by borrowing organizations. With the costs of everyday life, it is difficult to envisage finding an available budget for a new project. Using credit repurchase to linearize repayments with a single rate and duration may be a solution, and to lower the monthly payment.
The couple have a total of $ 31,000 to reimburse over 7 years at a rate of 3.50%. Their financial adviser advised them to buy back a loan so as to combine the three loans into one for an amount of $ 31,000. To lighten the finances of the household, the method consists in lengthening the duration of the credit. A new 12-year loan at a rate between 4.15 and 4.40% is concluded. Nathalie and Alexandre will now have to pay monthly payments of $ 370. The couple’s debt ratio thus drops to 33%, with a difference in monthly payments of $ 205 . What to look at the future with more serenity.