Revolving credit or personal loan? Choosing the right credit for your project

Choosing between revolving credit and personal loan depends first of all on the nature of your needs. These two means of financing make it possible to obtain a sum of money, without supporting documents, but at reimbursement conditions and at different rates. Note that a credit must be repaid, so you must be very attentive to your debt capacity.

Personal loan

Personal loan

The personal loan is more intended to finance a well-defined project. Indeed, it is the most suitable formula to offer you a trip, finance a wedding or buy a car.

You are immediately fixed on the repayment terms thanks to a table which lists the monthly payments due until the total repayment of the credit. As soon as you take out a personal loan, and the funds are released, the repayment process begins. For more information on personal lending, see the borrowing guide.

Revolving credit

Revolving credit

Revolving credit offers another mechanism. It allows you to have available a sum of money initially agreed with your lender, which you can withdraw when you need to. It is therefore a so-called backup solution, since you can subscribe to it to obtain a sum of money available at any time.

After subscribing to revolving credit and if you don’t use the money, the loan will cost you nothing. However, this operation comes at a price. When you use this line of credit, you automatically activate the loan and when repaying it, interest rates can range from 16% to 20%, while the personal loan is between 3 and 10%.

Revolving credit is a financing solution that replenishes the funds that you have used as you repay. This is why this type of loan is also known as credit.

Be careful, however, not to fall into the ease offered by this financing solution, because poor management can lead to over-indebtedness. For more details, see the guide to revolving credit.

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