Revolving credit is an easy but expensive solution to speed up the completion of a project. It is therefore not chosen lightly. It is particularly important to opt for a credit at the best rate, because the interests tend to be higher than with a conventional consumer loan.
What are all the criteria to take into account for this type of credit? Answers.
Compare offers: an essential step
When you approach, you will quickly see that revolving loans are very similar, even between competing establishments. The differences from one revolving credit to another relate to the interest rates charged, to the maximum amount of the envelopes, or to the availability or not of a bank card (or more exactly a card credit). And not surprisingly, some establishments are more expensive than others (TEG varying from 14 to 16%).
The large number of establishments offering revolving credits therefore makes a real comparison between revolving credits essential in order to choose the best rate of revolving credit, that is to say the cheapest revolving credit.
Another criterion to take into account: the use that will be made of this credit. It is essential to use your revolving credit well, and therefore to choose it according to your needs. If your goal is to be able to postpone purchases over time, it may be wise to opt for a loan backed by a payment card (which is not automatic). By making this choice, you can postpone your purchases and spread them over several months.
Choose an offer according to your repayment capacity
Have you already determined your funding needs but don’t really know how much it will cost you per month? Take a few minutes to perform a personal loan simulation online and assess your ability to repay revolving credit. This will allow you to determine the most advantageous offers and be certain that you have sufficient means to repay your credit.
The process is very simple: you just need to choose and enter the amount of your project or the desired monthly payments, enter the duration of the reimbursement and adjust the amount of the monthly payments or the project if necessary.
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Choose the right formula
Choosing revolving credit also means opting for the formula that best meets your financing needs. There are four revolving credit formulas:
- The classic formula. The bank opens a line of credit for you to draw on. You ask your creditor for a transfer of the amount of your choice to your checking account (always within the limit of the credit granted). Another possibility: the bank will issue you a check for the amount of the purchase you wish to make.
- The credit card. With this formula you have a bank card issued directly by the bank and usable like any bank card, both to withdraw money from ATMs or to pay merchants directly.
- The private card. This is issued by a brand or a network of traders (hypermarket, mail order company, etc.) with which the lending institution has negotiated its use. It allows you to make your purchases.
- The private card. This is issued directly by the lending financial institution. It can be used in store networks that collaborate with it.
Check certain points of the contract
Have you found the revolving credit that seems best suited to your needs? Are you about to sign the contract that binds you? Are you apprehensive about this moment and wondering what are the important points to check? Revision of interest rates, repayment terms, etc. Before signing, here are some keys to get through this stage serenely.
First, note that credit offers must mention that the interest rate is revisable, but also that you will be informed beforehand, by mail, of a rate revision and that you will have 30 days after receipt of this information to refuse this revision!
These are particularly important terms since they distinguish between conventional credit and revolving credit. A conventional loan provides for repayment at monthly installments and at fixed rates for a cost known when the contract is signed. This is not the case with revolving credit, the cost of which depends on variables unknown at the time of subscription.
In summary, using this credit requires comparing the formulas used to find the best suited and safest. The variables (rate, fees, mode of withdrawal of funds, subscription method) are indeed very important and differ significantly from one organization to another. However, your approach cannot be limited to this. It is also essential to take into account your income and your other current credits , so as not to accumulate monthly payments that you would no longer be able to assume. A revolving credit simulation can then be a good way to get an idea of your repayment capacity.
Watch out for over-indebtedness! To avoid any runaway, keep in mind that this capital reserve of a revolving credit constitutes a loan to be repaid after application of interest rates.