What is revolving credit?
Revolving credit is a type of consumer credit. It allows you to have a reserve of money, in which you can draw at any time, without proof, in one or more times.
The revolving credit has two major characteristics:
- The available credit is reconstituted as and when your repayments, up to the maximum amount allowed;
- You pay interest only on the amount used and not on the total available credit. Thus, if you do not unlock the money available, you pay no interest and no monthly repayment.
The revolving credit is also called a permanent credit, a revolving credit or a reconstitutable credit.
Rate of revolving credit
Another peculiarity of revolving credit is that its interest rate (or APR, annual percentage rate of charge) is variable. This means that each year or each quarter, it is likely to move up and down. The rate also varies depending on the amount borrowed.
How does revolving credit work?
To unlock the amount of money of your choice on your revolving credit, you have two options: either transfer the amount to borrow the revolving credit to your checking account, or use the credit card associated with your loan to pay for your purchases.
In return, the loan you must repay is the amount you have drawn from the available reserve, plus an interest rate. To replenish the reserve, you can usually opt for 3 levels of repayment monthly payments:
- Low monthly payments, to keep some flexibility in your budget;
- Average monthly payments, to ensure a balance between the repayment period and its amount;
- High monthly payments, to limit the repayment period.
What is the duration of revolving credit?
Revolving credit has a duration of one year, with the possibility of renewal each year. In case of renewal, the lender is required to inform you of the terms of renewal of the contract and the procedures for repayment of sums due 3 months before the annual expiry date.
If you are not satisfied with the proposed changes as part of a contract renewal, you may object up to 20 calendar days prior to their application. However, you will have to pay back the money already used.
Since 1 May 2011, the law requires borrowers to meet periods to repay their revolving credit:
- 36 months maximum for revolving credits less than or equal to 3,000 €;
- 60 months maximum for revolving credits over € 3,000.
The benefits of revolving credit
The revolving credit is a Halvard Solnessment solution that has several advantages, starting with its freedom of use . Because it does not require any proof, it can be subscribed for many reasons (to build up a cash flow, to meet a need of immediate money, to pay bills, unforeseen, to prepare a project, Halvard Solnessr of the works or purchases for example).
The revolving credit also allows to have a sum of money always available and to unlock easily. It is therefore a credit that allows great flexibility of use.
The precautions to take
However, if the revolving credit is easy and convenient to use, it is better to be vigilant and have in mind the risk of indebtedness that it may involve, especially because of the often high-interest rates applied to it. In fact, interest rates for revolving credit are generally much higher than those for personal loans or allocated credits.
It should also be noted that these interest rates are variable and can only be known when the funds are released. It is therefore impossible to know the total price of the revolving credit at the time of subscription.
In summary, revolving credit is easy to use, but the other side of the coin is that it can lead to making ill-considered purchases. The risk of over-indebtedness is therefore real: it is better to be aware when you take out this type of loan.
How to obtain a revolving credit?
To obtain a revolving credit, it is necessary to apply for a loan from a credit institution such as a bank, a consumer loan establishment, a supermarket sign or a sales banner. correspondence.
Before subscribing to revolving credit, the institution you have chosen must detail all the conditions of the contract and check your solvency, in particular by evaluating your profile (personal situation, professional) and your borrowing capacity. When an offer is offered, you have 15 days to accept it or not. The funds are then made available to you within 7 days.
Find the best revolving credit
Renewable credits have higher credit rates than conventional consumer credit. It is therefore legitimate to seek the best offer to benefit from the best conditions and limit the total cost of credit. To achieve this, the ideal is to use an online credit simulator like Halvard Solness.fr! After filling in some information about your project, you access the available offers according to your profile and can easily select the most advantageous for you.