Revolving Credit or Revolving Credit

Verified 13 December 2021 - Directorate for Legal and Administrative Information (Prime Minister)

Revolving Credit, permanent credit or replenishable credit, all these terms refer to revolving credit. It is a consumer credit with a high degree of freedom of use and repayment. Once the credit is granted, you no longer need to ask the bank for permission to use it. You can also decide to defer monthly payments. But interest rates are typically higher than those on a typical consumer loan.

Revolving credit is also called revolving credit, standing appropriation or replenishable credit.

It is a consumer credit that allows you to have a sum of money available that you decide to use freely.

You can decide to use the entire amount at once or to spend it bit by bit.

You can withdraw cash or make payments at retailers.

The amount used must not exceed the maximum amount allowed.

As you repay, the amount available for use is replenished.

Interest is calculated on the amount you used, not on the maximum amount allowed.

Each term you pay must include at least a portion of the capital you borrow.

Repayment periods must not exceed certain limits set according to the amount of the credit.

In most cases, this type of credit comes with a payment card. In this case, the card must be given to you together with the credit agreement and must bear on the back, in legible characters, the mention credit card.

A revolving credit can be offered by the following institutions:

  • Bank
  • Body specializing in consumer credit
  • Retail store
  • Mail order sign

The revolving credit must be the subject of a written contract.

Before offering you a revolving credit, the lending institution (bank, credit agency...) must offer you inform the terms of the loan and the extent of your commitments.

They should also check your financial ability to repay the credit. To do so, he must provide you with a standardized pre-contractual information sheet which indicate, for the amount of credit granted, the following:

  • Total cost of the loan
  • Amount of monthly installments
  • Interest rate charged

If the lender decides to grant you the credit, they must provide you with a copy of the written contract offer.

You have 15 calendar days to answer him.

If you accept the offer, the contract is concluded, but the funds cannot be made available to you before 7 calendar days.

Please note

if the amount of the credit is greater than €1,000, the lender must submit a proposal for a depreciable credit so you can compare the two offers.

To accept your lender's offer, you must give them a copy of the contract, dated and signed.

But this signature does not mean that you permanently accept the credit. Indeed, after acceptance, you have withdrawal period 14 calendar days during which you can reconsider your decision. The procedure to be followed in order to renounce the contract must be indicated in the contract. A release waybill must be attached. On his back, you have to find the name and address of the lender to send him back to.

Once the withdrawal period is exceeded, the contract is considered as definitively accepted.

Insurance is not mandatory, but the predator may require you to take out a assurance to give you the loan.

However, it cannot impose its own insurance on you. You can choose freely the organization that will insure your loan.

Once the offer has been accepted, the lender must send you a monthly summary statement of your credit status.

This document shall include in particular the following information:

  • Statement cut-off date and payment date
  • Share of unused capital (available)
  • Maturity Amount
  • Part of maturity corresponding to repayment of principal
  • Interest portion of maturity
  • Interest rate for the period and overall effective rate
  • Amount of refunds already made
  • Total amounts due
  • Estimated number of monthly payments due to achieve full repayment

Duration of contract

The revolving credit agreement shall be concluded for one year.

The contract may be renewed annually.

Before offering to renew the contract, the lender must consult the file containing information on hardcore payment incidents every year.

Every 3 years, they have to check if you still have the financial capacity to repay the loan.

3 months before the annual deadline, the lender must inform you of the conditions for renewal of the contract and the procedures for repayment of the amounts still due.

If you are not satisfied with the changes proposed when the contract is renewed, you may object.

You have to do it up to 20 calendar days before the new contract enters into force.

The refusal response slip to be included in the renewal letter should be returned to the lender.

You will then have to repay the amount of the money already used.

Credit repayment term

The law imposes maximum repayment periods that cannot be exceeded. They vary according to the amount of the credit:

  • 36 months if the total amount of the credit is less than or equal to €3,000,
  • 60 months if the total amount of the credit exceeds €3,000.

If the credit agreement is accompanied by insurance, the payment of insurance contributions may not result in these repayment periods being exceeded.

Possible changes

You can request the following changes at any time:

  • Reduction of your credit reserve
  • Suspension of your right to use the credit
  • Termination of contract

If you request termination of the contract, you must then refund the amount used under the terms of the contract.

You can also request that your revolving credit be converted to a traditional credit at the time of the annual renewal of the contract.

The amount of the refunds is then fixed and the termination date is known.

If you do not use the credit reserve

If, for 1 year, the credit reserve and the means of payment associated with the credit have not been used, the revolving credit agreement is suspended: you cannot use the revolving credit.

The lender needs to ask you if you want to terminate the contract.

He must send you a document which indicates in particular the following information:

If you return this document (signed and dated) no later than 20 calendar days before the contract's due date, the suspension is lifted and you can use the revolving credit.

If you do not return this document (signed and dated) within this period, the suspension is maintained.

If you do not reactivate the contract, it is automatically terminated 1 year after the suspension.

The lender can grant you a term extension if you have temporary financial difficulties or if your repayment capacity deteriorates.

However, this extension may not be granted more than twice a year. During this period, your credit usage rights are suspended.

Please note

if you have taken out insurance for your credit, it is important to check whether the difficulties you are experiencing are covered by this contract.