In everyday life, unforeseen situations can arise especially during very critical periods. Small family desires can also occur since everyone wants to follow the evolution of those around him. However, a more or less considerable embarrassment according to the case stands before people whose sources of income are rather modest.
More and more households are no longer able to follow the lifestyle they once led. To see many sources of money is therefore essential for these individuals to break the deadlock or simply satisfy their desires. Even if these homes are not currently facing any need, it is important to put something in hand in case an emergency occurs. It is a form of cash that can be relied on to provide solutions in difficult circumstances.
A piggy bank always nearby
The families in question do not need money right away, so they do not consider any particular purchase or project. Their only concern is to have a guaranteed security, solutions at hand. As a result, they can not benefit from consumer loan offers that banks and other financial institutions offer. Indeed, these creditors will require from their applicants the exact reason for the request. These are the case of the assigned loan and the personal loan for people in need of liquidity for a specific purpose. On the other hand, it should be remembered that these financial organizations also offer a form of loan allowing the beneficiary to have money available at all times. In the past, this type of credit was indicated by “cash reserve”, “permanent credit” or “revolving credit”. Currently, when dealing with documents related to this subject, the designation “revolving credit” is mandatory.
Main characteristic of revolving credit
The revolving credit is available from banks, financial firms, cooperatives or associations specializing in the consumer loan sector. It can also be offered by online auction houses or even department stores, but the final decision belongs to the partner institution. The principle of the lender is to make available to a person a sum of money of a certain amount for a maximum period of twelve months renewable. A subscriber can negotiate for his revolving credit by requesting a transfer to his own account. This sum of money is reusable according to the rhythm of its reimbursement. The maximum amount of money lent must be regulated and must not exceed a certain limit.
A very strong credit
This form of credit is very flexible, because the amount can vary according to the needs of the lender without exceeding the maximum amount allowed. The exact use of this money is not justified during the negotiation of a revolving credit agreement. However, purchases from shopkeepers or shopkeepers are very frequent by the beneficiaries since obtaining this type of loan is followed by a credit card. Thus, the debtor is free to make this sum of money one or more uses at undefined times.
This amount decreases each time he uses it or makes a purchase. As it makes a refund in whole or in part, the amount subject to the credit is reconstituted. Whenever the debtor draws from his reserve, a new acquittal period is created.
How to calculate the interest rate applied?
The interest rate will not be applied on the amounts used only. This means that a borrower does not pay interest on the amount of money available, but on the one that has been used. The total cost of a revolving credit is very difficult to evaluate because the interest rate varies every year and it is always more important than that of the assigned and / or personal loan.
However, revolving credit is generally the leading cause of more frequent overindebted individuals. So you have to be very careful when you have a revolving credit agreement, and you do not have to worry about any information, and the advice of a specialist is very useful. The operation of this loan can be a little too complicated and the evaluation of various elements is difficult or impossible. The borrower will be registered in the Banque de France if he does not pay two monthly installments in time.
Financing for whom?
The applicant for a permanent credit must have the necessary criteria to obtain the trust of a lender. A solid source of income is always the first asset for an applicant. As in all credit offers, both sides undertake to fulfill their respective obligations before the final conclusion of the contract being negotiated. The lender must carry out an audit with the Banque de France if his client is there or not. The debtor is obliged to provide documentary evidence as a guarantee and who will prove his ability to repay. It is from this ability to repay that the lender makes an assessment and decides how much money he will lend to the applicant. If the debtor so wishes, he may ask for an increase in the value he was granted at the beginning. This request entails a new study and establishment of a new contract. The means with which a borrower will make the repayment must be determined in a credit agreement. However, a regulation in progress gives the debtor the possibility of making full or partial prepayment of the amount remaining to be paid. Depending on the amount of the authorized capital, the credit must be repaid within three to five years. Every month, the lender is obliged to inform the borrower of the status of the execution of the contract by sending him a statement.
The benefits of a revolving credit
First, while the freedom to use the cash reserve is already a major prerogative, subscribing to obtaining revolving credit has many other benefits. The borrower can withdraw money from ATMs by credit card with the loan. This action will therefore allow him to have liquidity that he can use in everything he wants. The borrower can estimate that he has obtained a free loan through the operation called “three times without fees”.
This operation consists of paying three consecutive monthly payments before the deadline. Early repayments are not subject to any penalty. Another privilege is also the reduction of the delay of the postage of the funds and the monthly payments are lower than those of the other types of credit. The benefit of a revolving credit also has the option of retracting which is identical in all forms of loan. This period is two weeks from the date of acceptance of the credit offer.
How does revolving credit work?
The terms to follow are identical to those of other consumer credit and the tips are similar. After consulting a professional or visiting a website, a simulation and comparison is needed to assess the total cost of the loan. However, one must expect a very complicated calculation and the total cost of the credit will only be a rough estimate.
The financier carries out the analysis of the files and examines the family and professional situation of his client. After which, he gives her an answer immediately which will only be of principle. If this answer is positive, he presents the lender with a form to complete and sign. After that, both sides proceed to the final signing of the contract marking the conclusion of the agreement. When the deadlines stipulated in the rules are passed and the subscriber no longer thinks to change his mind, the latter can use the funds allocated to him.
How to cancel your loan?
It is possible that no desire or urgency will occur during the entire duration of the contract. In this case, the borrower owes nothing to the lender because he has not touched the money made available to him. However, failure to use credit for one year may result in the termination of this contract. The lender first offers a renewal of the contract at least three weeks before its expiry date. The contract is suspended if this date is exceeded and the borrower has done nothing to show his desire to continue, but he still has another year to lift this interruption. Otherwise, the contract will be canceled. To be more precise, the loan agreement automatically vanishes if the money reserve granted to the debtor remains intact for a period of two years.
To conclude, revolving credit is a very effective way to deal with unexpected mishaps if used wisely and with care.