The health crisis that has raged since 2019 has a profound negative impact on all countries of the world. In France, it has turned all sectors of the economy upside down, including household life. To cope with this, the French have changed their consumption habits in many areas, especially finance. Unlike the years prior to the health crisis, during which consumer credit was constantly increasing, the French now favor the consolidation of loans. What is credit consolidation? What can we learn from the sharp increase in requests for loan consolidation since the advent of COVID-19? Why do the French now prefer the consolidation of credits? We tell you everything in this article.
What is credit consolidation?
The consolidation of credits is a technique which consists in bringing together all or part of the credits contracted by an individual into one. It is still known under the name of repurchase of credits. This is a debt restructuring that aims to simplify the financial life of the beneficiary. The latter can bring together two or more outstanding loans, a loan with a financial debt or a loan with an amount to finance a new project. It is not necessary that the credits be of the same nature before proceeding to their consolidation. Thus, you can group together consumer loans such as auto credit, work loan, personal loan, revolving credit or other with real estate loans such as depreciable mortgage, loan agreement and tax exemption, loan in-fine …
You can also collect financial debts like authorized and unauthorized bank overdraft, tax arrears, unpaid rent, family debt or the like with any other type of credit. It should be noted that the consolidation of credits gives rise to a single contract. When you consolidate your credits, all the contracts that governed your previous loans are terminated. A new contract is in place and you now have a single point of contact to manage your debts. However, the conditions for credit redemptions vary from one lender to another. Some organizations are more reliable than others. This is why it is important to choose the right loan repurchase organization. To help you in this direction, discover this brokerage organization in consolidation of credits which stands out from others by the quality of its services. It can help you consolidate your credits efficiently with flexible contracts that are very beneficial for you.
The sharp increase in loan consolidation requests since the advent of COVID-19
COVID-19 has changed the relationship of the French with money. Indeed, according to several studies carried out on the financial behavior of the French since the onset of the crisis, it appears that the population is gradually abandoning consumer credit in favor of credit consolidation operations. The volume of loan repurchases in 2020 experienced net positive growth of 20% compared to 2019 while that of consumer credit fell by 10%. Predictions for the year 2021 bet on the same scenario: demand for loan repurchases will continue to grow while that for consumer credit will continue to fall. According to several financial experts, this change is due to the fact that the health crisis has led to the loss of income and reduced the purchasing power of the population. Hence, people now prefer solutions that allow them to clean up their finances like credit consolidation. The other reason is confinement. During this period, there has been a decline in leisure activities such as travel, weddings, outings, etc.
During the year 2020, the majority of borrowers were in a relationship and married. Singles represented only a tiny fraction of the requests. The amount of the various loans was almost stable compared to previous years. There were also no big changes regarding the length of the loan and the age of the borrowers.
Why do the French now prefer the consolidation of credits?
Beyond the health crisis, several other reasons motivate the French to prefer the consolidation of loans instead of other financial products. First of all, the repurchase of credits allows households to find a better budget balance. This is because when households combine their loans into one, they get a reduction in the amount of their monthly payments. They benefit from a longer repayment term and a single rate. The rates charged by repurchase agencies are generally lower than those offered by traditional lenders. Another reason is the simplification of budget management. When households consolidate their loans, they have only one financial contact, which allows them to manage their monthly budget more easily and efficiently. The consolidation of loans also decreases the debt ratio and increases the borrowing capacity. It allows the beneficiary to finance his projects while lowering his monthly payments.
If you want to improve your finances in this time of generalized crisis, simply look to consolidate your current or future credits into one. You can consider the repurchase of credits by the competition.