Navigating the financial world can be confusing, especially when you have to manage multiple loans at the same time. Personal loans, consumer loans and other debts can quickly accumulate, making it difficult to manage them. Fortunately, there is a solution: the repurchase of private credit.
The repurchase of private credit consolidates all your debts into a single loan. It's a convenient way to manage your finances. Moreover, simplified management is only one of its many advantages!
In this article, we will explore these benefits in detail. Moreover, we will also see why Lica is your ideal partner for a repurchase of private credit. After all, we have a decade of experience in Swiss private credit.
Contents
- What is the repurchase of private credit?
- Interest rate reduction
- A private credit buy-back can improve your scoring
- Lower monthly payments
- Get cash with a private credit buyout
- Why choose Lica for your private credit redemption?
What is the repurchase of private credit?
Before examining the advantages of buying private credit, let's define this term. Also known as 'credit consolidation', it combines several debts into one. So several bonds become one. By understanding this concept, you can better grasp its benefits.
The main objective of the repurchase of private credit is to simplify the management of multiple loans. Yet there is more to be gained from it. It also offers substantial benefits. Indeed, it is an effective strategy for improve your financial situation. This is especially useful if paying off various debts becomes difficult.
Interest rate reduction
One of the most attractive advantages of buying private credit is the possibility of reducing the interest rate total of your debts. When you have several credits, each of them has its own interest rate, which can vary considerably. Some may have relatively low interest rates, while others may have exorbitant rates. It is therefore crucial to always compare private credit offers before committing!
By consolidating all your loans into one, you can benefit from a lower average interest rate. This means that over the total duration of the loan, the total cost of your debt could be significantly reduced.
Let's take an example to illustrate this point. Suppose you have three loans with interest rates of 8%, 10% and 11%. By consolidating them into a single loan at a lower average interest rate, say 8%, you will save on the total cost of your debt. This can save you thousands of francs over the entire term of the loan.
To make this explanation more telling, here is an example in the form of a table.
| List of debts | Open amounts | Monthly payments |
| Bank “A” with a rate at 8% For a period of 60 months | CHF 14'500.00 | CHF 294.00 |
| Bank "B" with a rate of 10% With a duration of 84 months | CHF 30'000.00 | CHF 498.05 |
| Bank "C" with a rate at 11% Over a period of 48 months | CHF 50'750.00 | CHF 1'311.70 |
| Totals | CHF 94'750.00 | CHF 2'103.70 |
With a private loan purchase, you can save up to CHF 631.00 each month on your monthly payments!
Once the total of your monthly payments is known, all you have to do is compare it with the new monthly payment for your future financing. In this example, for a private loan of CHF 94,750.00, the new monthly payment could be CHF 1,472.10. You could therefore save up to CHF 631.60 each month!
A private credit buy-back can improve your scoring
Another key benefit of buying private credit is the ability to improve your scoring, or credit rating. Your credit scoring is a measure of your financial credibility, and it is often used by lenders to assess your ability to repay a loan.
By having several loans in progress, you appear as a risky borrower in the eyes of lenders. This can make it difficult to get new credit in the future. However, by consolidating your debts into one loan, you appear less risky, which can improve your credit score.
A key point needs to be emphasized. Improving your credit score has lasting implications for your financial health. Indeed, a higher credit rating opens the door to best interest rates on future loans. As a result, this could translate into significant savings over the long term.
Lower monthly payments
The reduction in monthly payments is another significant advantage of the repurchase of private credit. Indeed, when you have several credits, you must make several payments each month. Each of these payments can be high, which can weigh heavily on your monthly budget.
By grouping your credits, you can spread the repayment over a longer period, which can lead to a significant reduction in the amount to be repaid each month. This can ease the monthly financial burden and allow you to use the money saved for other expenses.
However, there is one aspect to consider. Spreading your payments over a longer term results in more interest being paid on the entire loan. It is therefore crucial to think carefully about this approach. Before proceeding with a private credit buy-back, discuss it with a trusted financial advisor.
Obtain cash with a consolidation of your loans
Finally, the repurchase of private credit can allow you to get more liquidity. Indeed, during the credit redemption operation, it is possible to request an additional amount. This additional amount can be used to finance a personal project, such as renovating your home or traveling.
This is an important advantage because it offers some financial flexibility. Rather than taking out a new loan to finance a project, you can simply use the money you have obtained thanks to your loan buy-back. This can allow you to carry out your projects while maintaining a stable financial situation.
Why choose Lica for your private credit redemption?
After detailing the advantages of buying private credit, you might ask yourself: why choose Lica? With more than a decade of experience in private credit in Switzerland, Lica is a trusted partner. We understand that each financial situation is unique and we are therefore committed to finding the most suitable credit redemption solution for your needs.
Whether you are looking to reduce your monthly payments, obtain a lower interest rate or finance a personal project, we are at your service.
Do you have questions before applying for private credit? Our advisors are there to answer your questions 7 days a week directly on WhatsApp. Ask us for more information and we will be happy to answer you!
