Online revolving credit
Faced with the urgency of an unforeseen event, money needs are often felt. To overcome this need, the revolving credit will allow you to have a sum of money, in an account opened for the occasion, without proof of use.
Beyond the unforeseen, this credit will give you total autonomy over your budget and you can use this reserve of money according to your needs.
This revolving credit is also called: permanent credit, revolving credit or replenishing credit.
This form of credit corresponds to unallocated personal credit. It does not require you to provide your bank with invoices that justify your expenses. It allows you to use your money freely without being accountable to the lender. It is also easier to set up but the interest rates are often much higher.
In order to obtain such credit, you will need to provide the lending institution with some administrative documents as you would for a classic loan application.
Online revolving credit
Revolving credit is subject to the provisions relating to consumer credit. The principle of this credit is to open an account with a lending institution in order to have a sum of money in return for the payment of interest in the event of partial or total use of said sum. The debtor can use this sum freely. The rhythm of monthly payments is provided for in the revolving credit contract.
The particularity is that it is replenished over the course of your repayments so that you can benefit from them again.
Concretely, a sum of money, known as a “reserve”, is made available to you. You can use it in full or as and when you need it. You will also decide on its repayment period according to the conditions of the contract. When we say that it is reconstituted over the course of your repayments, this means that the part of the repaid capital becomes available again and therefore you can use it again.
Interest is calculated only on the part of the revolving credit used. They are deducted from the sums remaining due at the end of each month. The overall staffing rate (TEG) is often around 20%.
To use your reserve, you have several options: either request a check or a transfer to your bank account, or use a specific credit-backed card to pay for your purchases. More and more, organizations are offering these same credits without a card, by making a transfer to your account, which allows you to have only one bank card.
Online credit, in general, tends to develop, revolving credit has not been missed in this fashion. Indeed, you can subscribe to this kind of loan through the Internet. You will need to compare the different possible contracts and the different possible interests. A study of your possibilities is essential in order not to find yourself confronted with a difficult financial situation.
Online revolving credit application
You, as a borrower, must assess your situation upstream like all traditional loan applications. You will need to determine how much you will need.
Applying for revolving credit online is similar to applying for traditional online credit and only takes a few minutes.
The site will first offer you to perform a simulation, which will allow you to position yourself in relation to your project and your ability to repay. Once the simulation has been entered, you can make your request on an online form from the lending institution in question.
If the opinion is favorable, a response in principle will be sent to you immediately.
Then, you will receive, both by email and by post, your contract offer. This file will have to be returned to the credit organization once it has been signed and accompanied by the administrative documents requested.
After the study and acceptance of the file, the funds will be available in the form of installments in your account within 48 hours of the transfer request.
This course is standard for all loan requests.
Repayment of revolving credit
You will be, in this type of loan, free to increase or decrease the amount of your monthly payment. You will be able to repay your loan early, without penalty.
There are two repayment methods: slow and fast. They allow the reserve used to be reimbursed more or less quickly by varying the amount of monthly payments. The slower you repay, the more interest you will pay over time. It is therefore preferable to reimburse quickly.
Insurance can be optional or compulsory depending on the case. Regardless of the loan, the borrower can subscribe to it. The insurance will be limited to the duration of the loan and will serve to guarantee repayment in case of unforeseen circumstances.
In principle, insurance is optional but some establishments make it compulsory, especially when it comes to mortgage loans.
The insurance fully or partially covers the following cases:
- Unemployment benefit, which covers you if you lose your job.
- Disability, whether partial or total. When the subscriber is disabled, this guarantee covers the monthly loan payments.
- Temporary or total incapacity for work, following a work accident or a work stoppage. Insurance then takes over.
- Death insurance, which insures the relatives of the deceased.
Protection of the borrower by a legal framework
The law tends more to protect the consumer from possible abuses. In particular, the Lagarde law of 2010, the Hamon law of 2014 and the transposition into French law of the European directive on “consumer credit contracts relating to residential property” in 2016.
Thus, a revolving credit without proof of use is possible, but not without proof of income. It becomes more complicated to borrow without proof of income for the safety of the consumer and to protect him from possible abuse by credit institutions. It was possible for a long time to borrow without these conditions but the law hardened. Revolving credit without proof of salary tends to disappear.
For a consumer loan of more than 3 months and for an amount less than € 75,000, the Scrivener law applies. It aims to inform and protect consumers. Therefore, a prior loan offer is required specifying its total cost and the cost of any insurance. The law gives the consumer a period of reflection, known as the “offer validity date” of 15 days. Finally, the borrower has a withdrawal period of 14 days once the prior loan offer has been signed, and if the contract is concluded at a distance, during which the borrower can still retract. This period is reduced to 7 days otherwise.
The contract is renewed each year, on condition that the lender has previously consulted the National File of Personal Loan Repayment Incidents (FICP). Likewise, he must check the creditworthiness of the borrower every three years.
However, the credit institution must communicate to you, three months before the annual deadline, the conditions for renewing the contract. You will then have 20 days before the renewal date to object. Conversely, to mark your acceptance, you must return the document sent to you by the signed credit institution. There is no such thing as tacit acceptance. If you do not respond, the credit will be suspended.
Revolving credit, towards over-indebtedness?
The reputation of revolving credit is indeed not very glorious. It has been found that over-indebted people most often have one or more revolving credits on their liabilities.
This observation is probably due to the main advantage of this type of credit: its ease. Indeed, its ease of use and flexibility of use can be detrimental, because once the contract is signed, the use of credit is not subject to the sending of any form or any supporting documents.
All the more so for online renewable credits where your will not benefit from support by a person in front of you. The virtual can make things easier but can lead to a loss of reality.
The risk is that this simplicity causes you to make excessive and thoughtless purchases.
Likewise, if you experience a drop in income, you will draw on your reserve even if your repayment capacity has become insufficient. Then this revolving credit will pull you down.
In addition, this type of credit has high interest rates on small amounts of maturities. It should be taken into account that the lower the monthly payment, the longer the repayment period will be, and therefore the higher the cost of credit will be. We must therefore avoid too low monthly payments.
With this credit you do not have the total amount of the cost that it will represent. It will depend on how you use it. It will vary depending on the amount and duration of the actual overdraft in your account. This is why it is preferable, if you have a financing need for a specific expenditure, to resort to conventional forms of loans (personal loan or assigned loan), the cost of which is clearly announced and often lower than revolving credit. In an extreme emergency, it's true that the ease of taking out this credit is convenient, but be careful not to get overwhelmed with interest.