Unallocated credit refers to the provision of capital on the bank account of a borrower to carry out one or more projects of his choice without having to justify his expenses. Among unrestricted credits, there are two possibilities: personal loan and revolving credit. What are their important differences?
Unallocated personal loan
The unrestricted personal loan can be used to finance a trip, study, or any other project at the discretion of the borrower or co-borrowers. The maximum amount awarded is 75,000 dollar s. The maximum repayment period is set at 7 years. Interest rates are below 10%, sometimes even below 3%. They vary depending on the repayment period chosen.
At the signing of the contract, an amortization schedule is given to the borrower. It includes the date of the first due date and that of the last. The repayment period is therefore fixed in advance, as well as the amount of the monthly payments. As soon as the borrowed capital is made available, the first monthly payment is started. The borrower is free to use all or part of the money.
A revolving loan is a line of credit that is payable in fixed monthly installments. The product is unique in that once 15% of the loan has been repaid; you can borrow again – up to your original amount.
Like the unrestricted personal loan, the use of revolving credit can be split. It can be used to manage unforeseen events, or finance small purchases up to the amount granted. The capital made available is however much lower than the personal loan. It can be subscribed to two. Interest is high, between 16 and 20%. They are calculated on the amount of capital used.
This is then replenished as monthly payments are made and can therefore be reused, hence its name of revolving credit. However, due to its high rates, the capital repaid is minimal. The repayment tenure is therefore unlimited. However, as long as the money reserve is not used, the borrower does not pay anything. It is possible to repay in advance and without penalty a revolving credit by an unrestricted personal loan, less expensive and limited in time.