Is it possible to use loan consolidation without insurance? Legally, yes. There is no law requiring the borrower (s) to take out loan insurance, whether it is a home loan, consumer credit or, in our case, a redemption of credits. However, loan insurance has become essential today, almost essential for a refinancing request to succeed. Explanations.
What is loan insurance really used for in a loan buy-back?
If you are interested in buying back credits, you understand that such an operation allows you to spread your debts over a new (longer) term, while reducing the amount of monthly payments. During such a financial arrangement (the famous grouping of loans), the borrower must be insured in order to maximize his chances of obtaining financing.
Because although not legally required, loan insurance is a strong guarantee for the bank. Death and disability insurance, or even job loss insurance, are powerful guarantees for banks, which will not be afraid of the risk of non-payment.
The new lender who will buy your credits wants to make sure that you can repay your new credit, even in the event of a health problem, accident or loss of activity. Insurance is thus a protection for professionals, but also for you.
Can you repay your unemployed loan? Can you repay your credit if your co-borrower disappears? Insurance protects both parties.
It is possible to combine your credits without insurance
Insurance reassures banks, also bring real serenity to borrowers, but is not mandatory. Without taking out insurance, you can try your luck and apply for debt restructuring.
The chances of your request being successful are low. Insurance is “cover” for both parties, and banks will refuse to refinance you if you do not have the latter.
- The financial fragility of a file makes lending organizations “cautious”. If there are multiple payment incidents, rejections and overdrafts on file, doing without insurance is a sweet dream;
- The need for insurance is not directly related to income. Even with significant income and a full estate, a borrower can have his file refused if he does not cover himself. Banks want concrete guarantees, and loan insurance is one of them.
Completely without loan insurance in the specific context of a consolidation seems complex. However, if loan insurance is imposed, and conditions the obtaining of loan consolidation, it remains possible to find solutions to reduce its cost.
Reduce the cost of loan insurance
If you are looking for a solution to avoid using loan insurance, it is probably because of the cost of this insurance! Indeed, borrower insurance weighs for part of the total cost of a loan. What is the percentage? It varies, depending on the age or the state of health of the borrowers, but also the amount of the loan group. How to pay less?
- Death insurance or death-disability insurance have become essential. If you need to focus on one type of loan insurance, and choose the “minimum”, then these two covers will likely be imposed by the bank. Do not neglect other protections that can be adapted to your profile;
- When validating your offer, give importance to insurance. Between the insurance offered directly by the organization that buys your credits, or the insurance taken out elsewhere (make a delegation of insurance), there is sometimes a nice difference in premium.
- Thanks to the Hamon law, it is possible to change loan insurance within 12 months of signing the offer. The only condition imposed is to present insurance with a level of guarantees at least equivalent to the original insurance.
Insurance provides you with real protection, and should not be overlooked solely for financial reasons. However, as we have just seen, there are solutions to reduce its cost. Ask the Meilleurtauxsolutions.com advisors to help you find the best insurance at the best rate.