If we want to use the offer of loan companies, we can choose several products that they have in their offer. The most popular one is a payday loan, a loan for 30-60 days, which we must usually pay in one installment. Another loan proposal is an installment loan. There are larger amounts involved than in the case of payday loans, and the repayment of the debt is spread over a dozen or so several installments. One of the latest loan companies’ proposals is a revolving loan line, which we will describe in this text a bit.
The simplest way is to say that it is defined in the agreement between the lender and the borrower the limit of funds from which the borrower can use, and the money can be used for any purpose. The amount of the limit is usually set on an individual basis. The loan company must examine the applicant’s ability to pay installments, possible entries in the debtors’ registers, etc. and only on the basis of the data obtained, grants a specific limit. When the borrower is informed about the amount of the granted limit, he can use it immediately. But what’s important, he does not have to use all the money at once. For example, we can get a loan limit of PLN 5,000, but currently we need only PLN 2,000. So we entrust the company in which we borrowed the money to pay that amount, and in the reserve we still have PLN 3,000, of which we can use this money at any time.
Importantly, interest will be charged by the lender only on the amount used, in this case from PLN 2,000. Likewise, we can decide for the repayment of debt ourselves. We can give the borrowed amount once or in installments. It is important to pay at least the minimum amount that we are informed about in the contract or in a separate document every month. Each debt repayment means that we will have to deal with renewing the limit and increasing the available funds. So if in our example we chose PLN 2,000 and we still had PLN 3,000 available, after repayment, for example PLN 1,000, our available funds will increase to PLN 4,000.
The loan line is granted for a specified period (usually 12 months). After this period, we should pay all debt along with all costs. However, if we do not have the money to indemnify debt, we can calmly ask for an extension of the repayment period for another period and it will usually be extended.
And what is the procedure for granting such a revolving loan line? Practically the same as in the case of payday loans. Firstly, we need to register on the company’s website which offers such a product, secondly verify your data via a verification transfer, thirdly we must specify what amount we are interested in and we will only have to wait for the application to be reviewed and the limit will be granted. When we get it, we can use the limit.
For sure, a revolving loan line is a very convenient form of borrowing money, additionally ensuring financial security. However, we must know that costs are associated with it, including:
– fees for withdrawing funds,
– account maintenance fee,
– annual fee,
– payment for a quick transfer, etc.
Of course, additional fees will also be charged if we do not pay the debt on time. This includes the costs of reminders, telephone calls, overdue interest, and finally costs of bailiff enforcement. They are high, so it is better to avoid such situations.
A revolving loan line is certainly an interesting option when it comes to loan products, especially for those who can not get loans from a bank for various reasons. So you can think about whether to use it when you need to borrow money and want to pay it back in monthly installments.