Do you temporarily need extra money? Don’t know exactly the amount you need? Then you can consider taking out a revolving credit. A revolving credit has a credit limit. Have you repaid a portion and want to borrow money again? That is possible, as long as you do not exceed the credit limit.
A revolving credit is therefore a flexible form of borrowing. After all, you can withdraw money again and again. However, there may be the condition that you return your credit to 0 after a predetermined period. After this, the loan can possibly be extended again.
Duration and costs of a revolving credit
In contrast to a personal loan, a revolving credit has no fixed term. The term is variable, because the loan only stops when you have repaid the entire credit and you no longer think you need money. You can therefore determine the duration yourself.
Interest and redemption
Of course, there are costs associated with the revolving credit. Every month you have to pay both interest and repayment. You usually have to pay 2% of the credit limit or the loan amount repaid.
In addition, you pay monthly interest. Do you have a revolving credit with a high credit limit? Then you pay less interest. The interest rate of a revolving credit is also variable. The interest rate can therefore both rise and fall.
Comparing pays off
Incidentally, it is worthwhile comparing different providers of revolving credit on the internet. Revolving credits can be compared on various websites. This way you can find the cheapest revolving credit with the best conditions.
Personal loan or revolving credit
Do you know how much money you need? For example, do you want to borrow money because you want to make a large purchase? Then you’d better take out a personal loan.
Do you have to pay off that loan within a certain time? So you know exactly how much you have to pay off each month. Moreover, with a personal loan you can prevent you from borrowing more than the amount needed to make the desired large purchase.
The benefits of a revolving credit
The following benefits are mentioned on the website of a well-known Dutch bank:
Do you want to do several major expenses in the near future? Then it is handy to have a revolving credit.
✓ You can withdraw money when you need it
✓ The great flexibility. After all, you can borrow the money flexibly or repay it flexibly. You can also determine whether the installment amount is 1.5 or 2.0% of your credit.
✓ You can also borrow large amounts, up to a maximum of 75,000 euros
✓ Of course you only have to pay back when you start using the loan
✓ The loan does not have to be repaid if you die ✓ Do you have an unexpected financial setback ? Then with a revolving credit you always have money in hand.
✓ With the free credit card you can pin at an ATM or in a store
The disadvantages of a revolving credit
The websites of lenders want you to believe that revolving credit only has advantages. That is of course not the case. A revolving credit has the following disadvantages:
✓ The interest rate can fall as well as rise during the term
✓ With a revolving credit you may have a tendency to spend money too easily. You borrow more than you actually need
✓ Being able to take money again and again is handy. This can, however, result in the loan continuing to run for too long. So you will not get rid of your debts.
I have already written a great many articles on this subject. The reason for this is that it is the most popular form of credit in the Netherlands and that a large number of consumers actually use this loan for emergencies. However, there are also many negative reactions on the internet.
It mainly goes wrong when applying for large amounts of up to € 25,000, whereby no repayments are made, but only interest is paid. This way you will never get rid of the loan and this has put a large number of consumers in trouble. Good Bank in particular came under heavy pressure after many consumers ran into problems due to ignorance.
Apply for a mortgage
When applying for a mortgage, the bank almost always requires you to cancel current loans. This is to prevent you from entering too many debts. So keep this in mind that when considering a mortgage application you have a not too large debt on your revolving credit.
If you do not cancel your credit, there is a high chance that the bank will not provide the mortgage. After getting your mortgage you can of course apply for a new loan, this is often no problem.