Before comparing the proposed credit available on the market, the potential borrower must first clearly identify the use of the money that he wants to receive:
- If this amount is used to finance a project defined as a renovation of apartment, buying a car or a trip, he may turn to the “traditional personal loan”.
- If this money can be used in a non-defined or for multiple expenses, then it is best that he turned to the “revolving debt”.
The flexibility of the revolving debt
Revolving debt (formerly called reserve money or credit reserve) allows the borrower to have a sum of money or loan available that can be used without proof of use. It is a credit available against which he may draw without proof of use, subject to sufficient credit and subject to acceptance of the application. As he does not use it, it costs him nothing. If he uses all or part of this amount, he must repay the amount in installments also defined at the outset. This revolving debt reconstitutes gradually, that is why this type of loan is also called credit rebuild.
It is possible to use the Revolving debt: purchases of consumer, small amounts, specific occasions (back to school, holidays), hardware, decorative items, pay rent, etc…
Classic Personal Loan
To know exactly what you are going to pay if the proposed purchase is determined as the purchase of a vehicle, a kitchen, a home theater, etc.., it is better opt for personal loans. And for even more security, choose the traditional loans, which allow in some cases to cancel the sale if the borrower does not receive funding.
In summary, if you have a defined project, opt for classic personal loan, if you do not yet know how the purchase will affect money or if you just want to have an amount available “just in case”, choose revolving debt.
Finally, once the choice has been made between one and the other possibility, when credit is in progress, there remains the possibility for the borrower, if he wishes to renegotiate its loans.