Only 4% of the French changed banks in 2021 using mobility scheme for banks set out in the 2017 Macron law, according to a poll&roll survey for the online comparator Panorabanques, cited by Le Parisien. Additionally, only 35% of those who switched banks actually used the device. Results currently disappointing for this law, but not necessarily surprising since the text of the law only relates to individuals’ current accounts. The latter’s various loans, whether property loans or consumer loans, are therefore not automatically transferable.

Changing banks with an outstanding loan using the Macron Law

Despite the fact that the banking mobility scheme of the Macron law does not allow the easy transfer of all its accounts and loans to another bank, it is still possible to use it to change institutions with a loan. A person can, for example, transfer your current account to a new bank, possibly open savings products there and leave your mortgage at your original bank. In fact, the Covenant Act of 22 May 2019 the obligation to have domicile of income in a bank in order to get a mortgage loan. For consumer loans, it is much easier to get them, as the credit organizations do not condition the granting of a loan on the opening of an account.

Another solution may be to use the bank mobility system and prepay its outstanding loans. This early repayment cannot be denied to the applicant if it allows for the settlement of a loan (Article L313-47 of the Consumer Code), but on the other hand, it may entail costs for early repayment. An early repayment allowance (IRA) is actually included in most mortgage contracts, and penalties are set for consumer loans. Costs that can be expected but are limited by French law to protect individuals.

Pay off your current loan at your new bank

Individuals have the option to switch banks regardless of whether they decide to use the banking mobility system under the Macron law. If they have an outstanding loan, they can ask their new company to buy it back, which is not always easy. In principle, banks want to keep their loans outstanding because they represent a source of income through the monthly repayments that customers make on their portfolio. They can therefore reject the redemption request, and that without having to justify themselves.

In turn, a person applying for a loan repurchase can hope to obtain a lower interest rate and/or lower costs of borrower insurance. If the new bank offers to buy back credit on terms that suit both the old bank and the individual, the deal will be closed more easily. The new bank will sometimes leave a few feathers there, but it will win a new customer. In addition, the covenant law’s removal of the obligation to have domicile of income in a bank in order to obtain a mortgage loan also allows establishments to be more free in terms of commercial negotiations. A financial institution is thus entitled to now offer a potential new customer benefits in connection with the buyback of a loan, such as a favorable interest rate or the elimination of costs (prepayment costs, administration fees, etc.).

Switching banks with an outstanding loan: the credit consolidation solution?

In accordance with the repurchase of loans, the grouping of credits consists, for a person, of making the repurchase of all his current loans by a new financial institution (bank, organization of credits). A person who wants to change banks with several outstanding loans can therefore use this solution. The grouping of credits gives the individual the opportunity to get all his loans together in a single repayable loan via a single monthly payment, which clarifies his financial situation.

However, this must always be kept in mind credit consolidation has both advantages and disadvantages. If the new monthly payment obtained may be less than the amount of all previous monthly payments, the loan period is in principle extended and costs may also be provided. The person who wants to use a pool of credits to switch banks with a current loan must therefore be sure that this banking will not put them in financial danger and that they will be able to continue paying back.

(By the editors at the hREF agency)