Revolving credit: focus on a misunderstood consumer loan
Often referred to as revolving credit, the revolving credit has the distinction of being a permanent credit where the borrower has a certain amount that varies according to his expenses.
The principle of revolving credit
When a bank or credit institution grants a revolving credit to a borrower, the borrower may use this amount in whole or in part. In the case of a revolving credit, the borrower receives a new credit equal to the repayments, hence its name as a permanent or revolving credit. Very often, a credit card is issued when a credit of this type is signed.
The characteristics of the revolving credit
Revolving credit differs from other consumer credit in certain aspects:
- one-year contract, renewable;
- repayment spread over 36 months if the amount is less than or equal to € 3,000;
- reimbursement spread over 60 months if the amount exceeds € 3,000.
Several types of lenders offer revolving loans:
- the banks;
- credit institutions;
- distribution signs;
- distance selling signs.
- Contract a revolving credit may require the subscription of insurance whose choice remains free for the borrower.
Monitoring and modification of the permanent credit
Once the contract is signed and accepted by the lender, the borrower receives a monthly summary of his situation, including the date of the statement and the date of payment, the share of the capital available or the totality of the sums. due.
After the subscription, the borrower retains the possibility at any time to reduce his credit reserve, to suspend his right to use it or to terminate his revolving credit agreement. In the event of termination, the borrower must repay the amount of the reserve used in accordance with the conditions set out in the contract.
In case of temporary difficulties, the borrower can obtain a deferral of the deadline without exceeding the limit of two postponements per year. During this period, the lender suspends the rights to use the credit. It is to avoid this situation that the lender may require in some cases the purchase of insurance before agreeing to a revolving credit.