Information about the revolving credit
If you are not yet familiar with the ongoing credit application and want to know more about it, please continue reading. We do our best to explain as clearly and clearly as possible what you can and can expect from a revolving credit.
Like the payday loan, the revolving credit is a form of borrowing money. You usually take out the revolving credit directly with a bank or through an intermediary (such as an electrical store and supermarket). The advantage of an intermediary is that they have already made the connections and agreements with the bank and can therefore enforce the most favorable loans for you. The revolving credit can therefore also be recorded via an intermediary.
Why request a revolving credit?
A revolving credit is a very flexible form of borrowing and is therefore very popular among consumers. You decide when and how much money you withdraw and you can have the money at all times. You agree in advance with a bank or intermediary (intermediary recommended) a fixed amount that you want and can borrow. This amount is free to spend according to your wishes. This way you can make a large purchase in one go, several small purchases or just to keep it behind. If you have withdrawn money from the revolving credit, then repaid it again, you can always withdraw this money again. The interest on the revolving credit is generally on average between 5 and 14.50%. This interest is during the The duration of the loan is variable and can always rise or fall. If you want to borrow at a fixed interest rate, read more about the payday loan.
Every month a previously agreed amount is debited for the repayment of the loan and you pay interest on the amount that you have withdrawn. Have you not withdrawn money from the revolving credit? Then you only pay off your monthly costs. It is always nice to know that you have money in hand if, for example:
- Something breaks in and around the house / car (repairs etc.)
- Want to make a nice purchase
- On vacation / weekend away
- Renovation / DIY
If the monthly costs for the repayment of the revolving credit fit in with your financial situation, and in addition the interest that must be paid on the withdrawn amount can actually be paid, this is a great form of borrowing money. That is why it is the most popular form of borrowing in the Netherlands and Belgium. It is a nice and safe feeling for consumers knowing that money is behind them.
Characteristics of the revolving credit
Some characteristics of the revolving credit are:
● A variable duration
The revolving credit has a variable duration. This means that the variable interest and the possibility of re-using repaid amounts are possible. You can also take back what you pay off the loan if necessary. The term of the revolving credit therefore runs as long as the loan is not paid off.
● Free repayment
The revolving credit can be repaid without penalty and free of charge. This is not the case with a payday loan, but here you pay a fine if you want to pay off earlier.
● Borrow money up to € 75,000
With the revolving credit it is possible to borrow an amount from € 1250 to € 75,000. This depends on your personal situation.
Applying for a revolving credit of EUR 75000 is unusual because of the large amount. In this case you may wonder whether you should not apply for a mortgage loan or a payday loan. Don’t forget that car loans are currently relatively low in 2017-2018. You can already borrow at a rate of less than 2%.
Calculate revolving credit
Bear in mind that you will pay costs in the form of interest, just like with a revolving credit. The interest rates may differ per financial institution or intermediary. Fortunately, the government sets a maximum annual percentage rate (APR) that financial lenders may not exceed.
- For mini credits up to EUR 1250, the APR is at a maximum of 14.50%
- For revolving credit between EUR 1250 and EUR 5000, the maximum is 152.50%.
- For revolving credit above EUR 5000, the APR is at a maximum of 11.50%.
Attention: Read the conditions carefully: Sometimes commissions and credit card costs are not included on the APR and you still have to pay these. Ask your service provider about it!
Beware of additional costs at the JKP. The total costs must be transparent for the consumer. Therefore ask behind the SECCI form that according to the EU must be drawn up for all loans. This document is signed by the consumer and you can take it home to clearly compare loans.
The interest for the revolving credit is, just like the term, also variable. This means that interest rates may fall or rise during the term.
With a revolving loan application, you must be well aware that when the interest rate rises, the repayment part of your monthly expenses will decrease. You then take longer to repay the revolving credit.
Of course you can arm yourself against the higher costs per month, as a result of a higher interest rate. Suppose interest rates rise, it is wise to repay some more money, or at least not to withdraw new amounts. With a revolving credit application, you can repay without penalty, making it even possible to repay the full amount at a high interest rate without incurring any costs. On the other hand, you can of course borrow a little more when interest rates are low, since this will cost you relatively little.
Intermediaries versus banks
Applying for a revolving credit is interesting when purchasing a laptop, camera, or other electrical equipment. That is why it is mainly electrical stores and supermarkets that are king of consumer credit.
If you prefer not to, you can also go directly to a bank and take out a revolving credit. It is then not specified for what purposes the money is used.
Difference between revolving credit and credit card
About 60% of Dutch people prefer to pay with a credit card. This works differently as a revolving loan. With a credit card, the money spent is taken from the current account at the end of the month. So if you have purchased something of 1000 euros, 1000 euros will be deducted from your bank account at the end of the month. If you do not purchase anything with the credit card, then naturally you do not have to pay interest either.
So if you can save little money or have little money left at the end of the month, this is effectively a risky supple. if the corresponding amount cannot be paid, high interest rates are charged (12% to 14% interest).
Moreover, you can request different cards at different stores. If one is not listed at the BKR or the Central Bank for loans, then one gets the green light. Therefore do not live above your position and limit your revolving credit to the extent possible.
Is credit insurance compulsory on consumer credit? Apply for ongoing credit
Some lenders dare to misinform customers. They want to impose a debt balance insurance on the consumer while this is not mandatory at all. Certainly not for a revolving credit. Of course this is done to generate extra sales, but for the consumer a debt balance insurance is of little use. Why is this?
- Usually it is a low amount.
- The duration of a credit is usually limited.
Figures show that only less than 0.5% of those consumers who have outstanding balance insurance on the revolving credit have ever used it!
So don’t be fooled and don’t make fraudsters even richer.
The revolving credit is a consumer credit and offers an interesting alternative to the payday loan for many people. Do you know that you will face high costs in the coming period, but you do not yet know exactly how high these will be? Then it is nice to use a continuous credit application, with which you ensure that you have at least enough money in hand. On the other hand, keep in mind that the flexibility is great and that the duration, for example, does not necessarily have to be fixed.
You can use the revolving credit in a number of different ways. For example, do you want to buy a car and also finance the costs of repairs and maintenance? Then it is wise to use this form of credit, since you do not have to state exactly in advance how much money you want to borrow. Instead, you can await the costs and then withdraw the desired amount based on that. The revolving credit makes borrowing money more flexible in that regard, so that you can use it in the way you want.
Set credit limit
The revolving credit works on the basis of a credit limit, as you can agree with the bank. You thereby ensure that you have the ability to withdraw money up to that amount, depending on how much you need. You can close the credit limit based on your income. With a revolving credit, there is usually a collateral, so it is primarily your income that matters. Do you earn enough to agree on a credit limit of € 10,000? Then you are not required to withdraw this amount in full, but you do have the option.
For example, you can choose to withdraw € 5,000 in the first instance. You can then use that amount to borrow a car, or to finance a large part of your children’s studies. Does it appear after a year that new books are needed, or whether you should have a car repaired? Then you have the option to borrow another € 1,000 or € 2,000. You can borrow money up to the limit, giving you the freedom to use it flexibly.
You also have a great deal of flexibility at your disposal with regard to the borrowed money. You must immediately repay the amounts you borrow, even if it involves small steps. That means that you will pay off the first € 5,000 and you can thereby ensure that you can finally go free of life again. The moment you need some extra money later, it is possible to withdraw it again, even if you have already repaid the amounts previously. We call this the zeroing period.
It is possible to re-take repaid amounts that makes the payday loan clearly different from the revolving credit. With a payday loan you borrow a fixed amount and you use the term to always repay this a little further. This is less the case with the revolving credit. This is especially interesting when you are faced with unexpected costs and you want to make sure that you have enough money. Feel free to re-enter the amounts and ensure that you can continue to pay the costs that you must incur.