News and various recent social movements have shown that purchasing power remains one of the major concerns of the French. For 47% of them, it is the main source of concern for health (37%) and the environment (35% *). In addition, some households have taken out several loans (personal loans, home loans, revolving loans) and the share of monthly repayments constitutes an item of expenditure which threatens the balance of their budget. In this situation, buying back credits can be a suitable financial solution to find a more comfortable living.
The French and their purchasing power
The purchasing power of a household corresponds to the quantity of goods and services that one can acquire with its income. It depends on both the price level and the level of our resources. Thus, if the increase in our income is greater than that in prices, then our purchasing power increases.
To calculate it, account must be taken of disposable income, that is to say income from employment, plus social benefits received and less taxes paid. In this activity income, we will consider the salaries for employees, the fees for the liberal professions, the income of artisans, traders and entrepreneurs, as well as property income (interest, dividends, rents received…)
Although our purchasing power increased in value in 2019, the French do not perceive these changes. They are more and more likely to believe that their purchasing power is deteriorating. The share of those who consider their purchasing power to be low has increased (22% in 2019 compared to 18% in 2018), and the number of households judging that their purchasing power is “correct but no more” has decreased ( 54% compared to 56% in 2018 *)
To save money, many French people choose to reduce their expenses: 22% declare that they have reduced their food costs in 2019, 14% their energy expenses and 11% the costs related to transport.
The advantages of buying credits to balance your budget
The total amount of repayment of your credits is an important part of the expenses which come to reduce your purchasing power. Under these circumstances, a loan buy-back can prove to be a very advantageous solution to find an oxygen tank and increase your monthly living allowance.
The principle is simple: it involves redeeming all or part of your old credits to replace them with a single single loan. This unique loan, known as a consolidation loan, benefiting from better rate conditions, then allows you to have only one repayment to make, with a monthly payment lower than the total of your previous repayments (most often with an extension of the duration).
By doing so, you can free up more money each month to cover your daily expenses, or even save some money to build up savings.
With the exceptionally low level of current borrowing rates, buying back credit can be an ideal solution to balance your budget and protect yourself against the risk of over-indebtedness.
Ideally, it should be done in the first half of the term of your loans. The more interest you have on your old loans, the more you will gain. It is indeed necessary that the gains obtained are greater than the costs generated by your end of contracts. As a general rule, it is also considered that the difference between the old rate and the new one must be at least 0.7%, or even 1% for the operation to be profitable.
In all cases, your situation should be studied in a personalized manner. It is therefore in your best interest to consult loan repurchase experts such as the advisers of Spin Lender who will be able to guide you towards the solution best suited to your situation.
Good to know: a loan repurchase can relate to consumer loans, revolving credits, personal loans, restricted loans, home loans, but also other debts, such as late payments of tax or rent, bank overdrafts or amounts due to bailiffs.