A revolving bank loan, what is it and how does it work?


We have probably met more than once with the bank’s revolving loan offer. The product is quite often proposed by banking institutions, an increasing number of people use it. But what exactly is a revolving bank loan? When it is useful and how to use it.

What is a revolving bank loan?

What is a revolving bank loan?

We will try to explain by example. Many times in life we ​​meet a situation when we suddenly need financial resources, not large for current expenses. We can then choose to take a quick loan or just provide the bank with a limit. This is all the better because we can re-use it at any time by paying back this obligation. If one-time bank help is not enough for us, we would like to have a secure financial buffer on hand, a revolving loan is a good solution.

Bank revolving loan – loan costs

Bank revolving loan - loan costs

As with any banking product, be it cash loans or credit cards, we pay attention to costs. What is the APRC, commission costs of the revolving credit granted to us? How are fees charged? Are they calculated on the whole of the revolving loan used or only on part of the funds we use?

It is worth asking and reading a revolving loan agreement. How long will the loan be granted, how much will it cost us to renew? Whether the costs will always be fixed or depend on the use of the product. We take the average cost of a revolving bank loan at 10% per annum, usually from the funds we use.

Revolving bank loan, principle of operation

Revolving bank loan, principle of operation

A revolving loan is a product belonging to our savings and settlement account maintained at the bank. The main function of a revolving loan is to increase the funds available on your account. The customer uses the invoice, if he runs out of free middle he starts to use a revolving loan . When a salary or transfer is received automatically, such a revolving loan is repaid, plus a commission based on the contract. Usually the cost is around 10% per annum. Loans are usually concluded for 12 cities with an automatic extension. The amounts start from a few hundred dollars to even 100 thousand dollars made available by banks to their clients, mainly corporate ones.

Advantages of a revolving bank loan

Advantages of a revolving bank loan

There is a reason why a revolving loan is a very popular loan, eagerly taken by people . It has the advantage that we get a certain amount to use at any time and pay from its use. We can renew the withdrawal of funds at any time if necessary.

A significant saving of time is credit renewal. Thanks to this, we save time on signing subsequent credit documents. Instead of getting a cash loan for a smaller amount, pay it back and apply again, sign a ton of documents, we are only launching our revolving loan again.

Revolving loans as well as revolving loans can be obtained outside banking and banking. We strongly recommend applying for bank obligations. APRC proposed by banks is definitely lower.

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