A revolving loan is a type of loan in which the borrower “receives” for his own use (in a specific period) a certain amount of money (depending, among others, on his creditworthiness) and can use it at any time. When defining a revolving loan, it should be emphasized, as the name suggests, its “revolving”.
It happens that we are put in a dead end and we urgently need money. Then what? We often decide to take out a loan or a loan. An alternative can be a so-called revolving loan . What exactly is this solution? Is it worth to decide on them? Why? What is good to pay attention to when concluding a revolving loan agreement?
Revolving loan – definition
A revolving loan is based on a simple principle of operation: the client receives for his use (within a specified period) a specific amount of cash. How high the amount will be is determined, for example, by your creditworthiness. A characteristic feature of these types of loans is their “revolving”.
When deciding on a similar solution, it is necessary to pay attention to, among others, at what time, what amount etc. should be made next loan repayments (our obligation in this regard is very important for your credit history) and what is the interest rate, APRC, commission or on what basis the interest is calculated. In the case of revolving loans, very often interest only applies to the amount that the customer has used.
How much it will ultimately cost us
Of course, revolving loans are subject to a number of conditions that are closely related to the offer of a given lender, which is why they may be of a different nature, based on different rules and it is necessary to examine each proposal in detail and study the contract carefully. Many factors also need to be carefully checked, for example, how much it will ultimately cost us to use a similar solution, what the total cost of the loan is and what such costs depend on.
Advantages of a revolving loan
When should you consider making a similar commitment? In what situations can a revolving loan really work? For example, when we know that we will need small amounts for a limited period of time. However, you always need to soberly assess your financial capabilities for repayment of a similar liability and carefully review the contract and the terms of the loan. The big advantage of revolving loans is also the possibility of reducing any formalities.
Remember: a revolving loan is a special type of loan that can be found in both banks and non-banking companies. When deciding to make a similar commitment, you should carefully analyze a number of factors, including the conditions offered, the total cost of the loan, and your financial condition.