A revolving credit is a loan where a maximum amount can be borrowed. This amount is agreed on the basis of your income and it is also checked whether you have other loans. You can then decide for yourself how much you want to withdraw from the revolving credit and when you will repay the amount.
There is no fixed term, because you can withdraw money every time and then repay it again. The money that is repaid can also be withdrawn every time. This is the reason why there is talk of a consumer loan, you can opt for a repayment-free variant, but you can also opt for a revolving credit where you have to pay off a fixed percentage continuously.
Benefits of revolving credit
The benefits of a revolving credit are as follows, it is a very flexible way of borrowing money. You can withdraw money, repay that amount and then withdraw that money again when you need it again. In addition, you do not have to take out a new loan continuously when you want to borrow money again. There are also disadvantages with a revolving credit, because you do not know in advance where you stand.
The interest is not fixed, it is variable so the interest that you have to pay is different every month. Consider the advantages and disadvantages and consider choosing a revolving credit.
Credit with the Bank
The moment your money is short and you still want to buy something, you can take out a revolving credit. At such a moment, borrowing money can be very useful. You want to replace some products immediately. You can think of a broken washing machine or major repair to your car.
With a revolving credit you do not have to request a separate loan for every special situation, but you can handle this flexibly. Once you have received holiday pay or if you incur fewer expenses in a month, you can repay this credit immediately.
Before you take out a revolving credit you must ask yourself the following things: Is it possible to build up a piggy bank yourself for unexpected costs? Do you have enough money left to live after interest has been paid? What is the term of the loan? What is the amount of the desired credit?
Preferably do not use a revolving credit for luxury products such as an extra winter sports holiday or a weekend away. It is a way to meet your costs in unexpected situations. Note: Borrowing money costs money!