Saturday, January 4, 2020

Personal loan or revolving credit: how to choose?

How to choose between personal loan or revolving credit, what are their differences? Is one of the two credits more or less suitable for certain projects? We will see that these two consumer credit products are very different on several points. Let us identify what differentiates personal loans from revolving credit, in order to see in which cases one or the other is more suitable.

Personal loan or revolving credit: two very different loans

Personal loan and revolving credit belong to the same family of consumer credit. They are offered by all the major credit organizations, the majority of banks, and even some insurers. Their operation is however very different. Let's review the characteristics of each type of credit.
The personal credit is rather intended to fund a project of a certain size over time, while the revolving credit adapts well to small projects or unexpected life .

personal loan or revolving credit

Note also that revolving credit is easier to obtain than a personal loan without credit proof from direct lenders . This is true in terms of supporting documents (generally no tax notice to provide for employees), but also in terms of acceptance criteria.

Revolving credit = higher rate

Finally, revolving credit is much more expensive than personal loan . This is mainly the case when reusing money by transfer or purchasing on credit using a card attached to the contract (store card or a financial institution). The revisable APR rate of revolving credit indicates that it is likely to change during the loan. The borrower is always notified in advance in this case.
The main rate change is that observed when using the money in its reserve. It is concretely possible to obtain a first revolving credit at a rate of 7% or 8%, but that each use of the additional credit is associated with a rate close to 20%, over a repayment period provided for in the contract. Reading your credit agreement well helps avoid unpleasant surprises.
The best way to avoid paying too much interest is to repay your revolving credit as quickly as possible . It is also possible to repay it in advance, without any penalty.

Revolving credit: the pitfalls to avoid

The risk is to "draw" too regularly from its reserve. This practice has the effect of increasing the monthly payments of the loan and a new calculation of interest. Ultimately, the risk is that you will never succeed in repaying. We strongly advise against seeking revolving credit to repay debts and get out of a recurring overdraft .
The revolving loan is on the other hand a much more flexible credit in its use than the personal loan (see cheap personal loan ). It provides access to a reserve of money. It is also the only consumer credit allowing money to be obtained within 24 to 48 hours from one's account in the event of the unexpected. Sometimes offered with a credit card, this small loan can be practical and useful. There is no risk in borrowing it unless it is misunderstood or used.

Personal loan or revolving credit: never without comparing

Whether it is a personal loan or a revolving credit, APR rates are always very variable from one organization to another . It is quite possible that the Sofinco personal loan is offered at the best rate on 10,000 euros in 48 monthly installments, but that it is the best Cofidis personal loan for the same amount in 60 months. The best behavior to have is to use a comparator.

Use our comparator for a personal loan

You have to select "personal loan", or "need money" and an amount greater than 4000 euros to access the best personal loan rates . Our personal loan or revolving credit comparator has been developed with a simple objective: to offer each future borrower the best rate actually accepted for which they are eligible.
Here are the steps to apply for a personal loan:
  1. Enter "personal loan" and an amount greater than 4000 euros on our credit form
  2. Indicate a repayment duration in line with its repayment capacity
  3. Complete the four steps of the quick personal loan questionnaire (identity, address, location, budget)
  4. Our comparator displays the three best APR rates of the day, among the largest organizations compared (Cofidis, Sofinco, Cetelem, Franfinance, etc.)
  5. The best organization provides an immediate response in principle
  6. It is possible to obtain an opinion from each of the three organizations in order to increase your chances of obtaining funding.

Use our comparator for revolving credit

You must select any amount between 500 euros and 4000 euros to access the best revolving credit offers.
The stages of the revolving credit questionnaire are identical to those of the personal loan. Only the results screen is different. Indeed, the most important thing when asking for a small loan is to obtain a favorable opinion.
The organizations displayed are therefore those offering the smallest monthly payments and best rates, but also those most inclined to accept the request. A double criterion that one does not find on the classification of the personal loan, which displays only the three best APR rates without bringing into the balance the acceptance rates.

Personal loan or revolving credit: what the law says

Personal loan and revolving credit are two consumer credits. As specified by law, personal loan or revolving credit allow you to withdraw for 14 days. Deemed more at risk due to the possibility of reusing the money, the revolving loan is particularly monitored. The Lagarde law of 2011 indeed framed this type of credit more clearly, in order to minimize the risk of over-indebtedness.