Revolving credit, also known as revolving credit or permanent credit, is a special form of consumer credit, so the associated regulation is specific to it and somewhat different from credits such as the personal loan or the assigned loan. The reserve of money available under a revolving loan decreases when it is used by the borrower, and then gradually changes over time as repayments are made. It is a loan that can associate with a credit card (a credit card).
The borrower has the right to dispose of the sum made available by the lender as he sees fit
He can draw on the cash reserve in part or in full to make the desired purchases. However, these expenses can not exceed a certain limit, a maximum amount set when signing the revolving credit agreement. The available sum is then reconstituted within the allowed limit, as the borrower repays his loan. He can then use it again, always under the same conditions.
A revolving credit can be offered by a bank, an institution specializing in consumer credit, a supermarket sign or a mail order store.
If the amount of the revolving credit is greater than 1000 euros, the lender must also propose a credit amortizable to the borrower so that it can make a comparison of the two offers and choose the one that is best suited to his needs.
With regard to the repayment period, if the credit amount is less than or equal to 3000 euros, it can not exceed 36 months (3 years) and can go up to 60 months (5 years) if the amount borrowed is greater than 3000 euros.
It is possible to postpone deadlines twice a year at most if the borrower encounters difficulties in his repayments or in the event of deterioration of his solvency. However, a postponement of deadlines implies the suspension of the borrower’s right to use the revolving credit.
Once the credit is set up
Each month, the lender must send the borrower a document summarizing the status of his loan. This includes the rate of the period and the overall effective rate, the amount available, the amount of the monthly payment and the interest portion, the date of statement of the statement and the date of payment, the amount of the repayments already made or , all the amounts due.
The contract for a revolving credit has a duration of one year and can be reinstated every year. Each year, the lender must verify that the borrower is not registered with the FICP (personal credit repayment incident file) before any renewal of the credit. Similarly, the creditworthiness of the borrower must be verified every three years.
The lender must also inform the borrower of the conditions for reinstatement of the credit as well as the repayment terms, three months before the end of the revolving credit agreement. If the borrower disagrees with the new terms, he or she has the right to object for up to 20 days prior to their application, which will automatically terminate the borrower’s loan agreement.
The contract for a revolving credit can be changed at any time
The Borrower may request, if he wishes, the suspension of his right to use the credit, the termination of the contract or the reduction of his reserve of available money. The amount of the credit used will have to be repaid. It can also make an early repayment, partial or total, without this implies a penalty.
Other changes may also be made, for example, the change of the revolving credit into conventional credit when it is renewed. This makes it possible to determine a specific date of end of the contract as well as to fix the amount of the refunds.
The revolving credit agreement may be suspended if the borrower has not used the available cash reserve for one year. At this point, the lender must propose to the borrower to terminate the contract by sending him a document with certain information relating to credit. If the borrower wants his contract not to be suspended, he must return this document to the lender no later than 20 days before the end of the contract. The latter will be terminated one year after the suspension of the revolving credit, if the borrower decides not to reactivate it.
The repayment terms can vary depending on the institutions offering renewable credit offers
Monthly payments can be fixed and then recalculated each time the reserve of money is used, they can be variable depending on the amount granted or degressive. Each credit institution can offer different repayment rates for this type of loan. This can be a quick repayment with high maturities or a slower repayment. The repayment term of the loan depends on the repayment rhythm chosen by the borrower.
With regard to fixed monthly payments, the cost of credit does not change until the borrower makes new financing, except in the event that the rate is changed.
There are two ways to set up a revolving credit
First of all, we find the line of credit which is equivalent to a credit limit. It is possible to draw in this reserve of money by check or by transfer. The other possibility is the credit card that can be granted by a bank, a consumer credit institution or a department store. This makes it possible to have a payment card with which it is possible to make purchases.
For example, loyalty cards that can only be used as payment on credit are now prohibited and must have the ability to pay on credit or cash. The cash payment must also be activated by default to allow the consumer to avoid drawing on his revolving credit without being aware of it. Thus, if he ever pays on credit, the consumer must specify it either during his checkout or by receiving his monthly statement. In addition, no promotion can be associated with a payment in credit, something that was previously practiced by some department stores.