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Revolving loan in Switzerland

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Ever heard of a revolving loan? This financial solution, well known in some countries, is not really widespread in Switzerland. Discover our explanations.

Revolving loan: definition

With a traditional credit, you may choose the loan amount as well as repayment duration. A revolving loan is more a sum of money at your disposal. You can borrow freely from this money pool as well as reimbursing it according to your budget, with no restrictions. Generally, this kind of loan exists in two alternatives:

  • A bank account in which you can take an overdraft.
  • A credit card, used to withdraw money, or even pay directly.

Revolving loan: benefits

The main advantage of a revolving loan is of course it’s flexibility. Thus, with a revolving loan, you can:

  • Borrow money from your “money pool” at any time and instantly.
  • Repay the money according to your preferences, without having to meet a repayment schedule.

Drawbacks

If the revolving loan looks like interesting due to it’s flexibility, this financial solution is not without any risk or disadvantage. Indeed:

  • A revolving loan usualy comes with an higher interest rate. This flexibility will cost you more money than with a “traditional loan”.
  • It is well-known that revolving loans are quite risky, and more often leads to oveoverindebtedness.

Revolving loans in Switzerland

This kind of loan is not really widespread in Switzerland. However, some banks are starting to offer this kind of financial solutions. If you are interested to learn more, the best way is always to seek advice from a credit agency which you trust.

Article written by the team of CreditLoan: http://www.creditloan.ch