Money in hand with a revolving credit | Apply for ongoing credit
Due to its flexibility, revolving credit is a popular form of loan. You always have money in hand. During the term you can simply withdraw the money that you have previously repaid. If you have to make a large expense at a certain moment, you can transfer an amount to your own checking account up to the amount of the payment limit that you have agreed with the lender in advance.
This way you will not borrow more than the amount you need. For a credit application, the provider can have the loan history of the applicant checked by the Credit Registration Office (BKR) in Tiel. As a result, a better estimate can be made of the financial situation of the customer. On the basis of, among other things, this information, the lender may decide whether or not to grant the loan. The lender is required by law to report every new loan to the Credit Registration Office.
Duration of revolving credit is variable
Once you have withdrawn an amount, you must pay a fixed amount to the lender every month. This consists of a part interest and a part repayment. The loan agreement does specify a term in advance, but because the interest payable is variable, the share of the interest part and the repayment part may change. If the interest rate rises, the part that you pay for this becomes larger than the part that you pay off. After all, you continue to pay a predetermined amount. The result is that it takes longer for you to pay off the loan. It is therefore not known in advance what the course of the loan will be like.
In general, the interest rate to be paid for a revolving credit will be higher than for a mortgage loan. With such a loan, the lender has the real estate, usually a home, as collateral. This increases the certainty that the money borrowed will return.
If the person who took out the mortgage can no longer pay the loan, the mortgage provider has the option to seize the house and can sell it. The personal loan also usually has a lower interest rate. Because the interest rate with a revolving credit can vary, there is a certain risk for the borrower that he can no longer meet his payment obligations. Because when the interest rate goes up, the repayment portion will be lower. This extends the duration of the loan.
End of the loan often not in sight
Due to its flexible nature, revolving credit is an attractive form of borrowing for many people. Yet it also has hooks and eyes. The majority of borrowers never pay off the credit in full. This is mainly because an amount that is repaid can easily be withdrawn. As a result, borrowers not only continue to pay off, but also pay interest. And it is precisely because of the interest that the total amount paid can rise to a multiple of the original credit limit.
Remission in the event of death
Some lenders waive all or part of the loan in the event of the borrower’s death. As a result, the surviving relatives at least will not be left behind with debts.