The redemption of credits and the restructuring of debts
At first sight, the redemption of credits and the restructuring of debts seem to designate the same banking operation. The repurchase of credit is known in several forms of expression like the repurchase of loans, the restructuring of credits, the regrouping of loans, the renegotiation of credits, the financial renegotiation.
All these terms refer to a private banking operation whose objective is to rebalance a borrower’s budget on a long-term basis by pooling several of his debts into one with smaller monthly payments and repayment terms. Credit consolidation allows people with multiple loans to consolidate into one with lower monthly payments to lower their debt ratio.
Debt restructuring is rather a solution or an active management tool that allows a borrower to consolidate all of its loans or outstanding loans without it being financially difficult. For a borrower, debt restructuring may be a way to improve chances with lending institutions to more easily obtain new financing for new projects (real estate investment for example).
The redemption of credits and the redenomination of debts
At first sight, the redemption of credits and the redenomination of debts seem to be two expressions designating the same service. However, differences exist. In fact, the pooling of credits is generally carried out by an intermediary in banking operations whereas the redevelopment of debts is a renegotiation of its credits with the bank or the lending organization. The operation is simpler because there is no paperwork, closing costs or opening an account, or fees. A new schedule is then set up with new monthly payments and new negotiated terms.
Credit redemption and debt restructuring have a common objective: to obtain better financial conditions with a significant reduction in overall monthly payments and applied rates.
Be careful though: the lender will not buy the credits from its competitors. So if you have signed consumer loans or real estate loans with different organizations, buying credits with a broker will be the best solution to reduce your monthly payments.