One of the most common reasons for reaching for a loan is sudden, unexpected expenses that we cannot cover with current funds. In this case, we care primarily about time and comfort. We want to receive money quickly and without unnecessary formalities, but this is not always possible. In this case, an interesting solution that could potentially become a lifeline is a revolving loan. Just what is a revolving loan?
How does a revolving loan work?
There is a reason why the term “revolving loan is so often searched for”. Most adults who have taken out loans or borrowings have probably heard about this banking product. This is not a completely niche type of loan, but it cannot be denied that knowledge about it is generally less than about even a cash or mortgage loan.
A revolving loan is a kind of extension of the current and savings account in a given bank. So if we want to take out such a loan, you can not do it without a ROR. Thanks to it, a limit is added to the account, which can be used at any time during the term of the loan agreement. It is usually signed for a year, but there are exceptions to this rule.
Is it difficult to get a revolving loan?
People who are interested in what is a revolving loan will no doubt want to know who will receive it. When it comes to revolving loans, the same conditions apply as for other types of loans. The basis is legal age, it is also necessary to open or already have a current account. Of course, a mandatory element of the whole process is also to verify the customer’s creditworthiness. However, the fact that it usually does not have to be as high as in the case of a similar cash loan can be nice. In addition, as a revolving loan is an extension of a bank account, first and foremost are the influences on it: especially if they are regular and what amounts they amount to.
Above all, the bank’s long-term customers can count on receiving a revolving loan, who at that time could have frequent receipts to their bank account. However, not only – there are many revolving loan offers, and each bank adopts slightly different rules. Therefore, it is definitely worth not deciding on the first offer, which will seem interesting. It may turn out that what seems to be beneficial at first glance is not at all, and another bank will be able to offer much better conditions. Fortunately, currently applying for a revolving loan can be very simple. If we are already clients of a given bank and there is no need to set up a new savings and settlement account, in many cases it will turn out that we will be able to submit the application via the bank’s website or its mobile application.
Is it worth taking a revolving loan?
You can take a revolving loan and not use it for the entire duration of the loan agreement. Contrary to appearances, this would not mean any loss. No interest is accrued on the unused limit, and you never know when an accident can happen. Money granted as part of a revolving loan can wait “for a rainy day”, which will not necessarily happen, but if so, will be without stress and nerves. You will no longer need to apply for a loan when time is running. A revolving loan is also a relatively cheap loan. Its interest rate in each bank may be different, but generally speaking it does not belong to expensive loans.
In addition, its cost also depends to a large extent on borrowers: the faster the limit is repaid, the less interest will accrue. Sometimes, to encourage customers, banks offer no interest if the limit used is repaid within a certain period of time (for example, within a month or two). In this way, you can save extra money, so you should take an interest in this type of opportunity. In addition to interest, there are, although not always, other costs associated with a revolving loan: first of all, the bank’s commission, whether for granting it or for renewing the limit. You don’t have to guess the cost of a potential revolving loan. Individual banks often provide special calculators on their websites to estimate. It is enough to provide information such as the desired amount or expected amount of funds that will be used within the limit.