Understand the Difference between Revolving Credit and Installment Credit


If we try to divide the credit or loan repayment, it can be fundamentally divided into two types: revolving credit and installment credit. In this post, we will be going to discuss these two types of loan options.

Installment Credit

Installment credit is a type of lending option in which you have to repay the loan amount in monthly or weekly installments as per the predefined schedule. You have to make the periodic payments, and the full repayment ends the credit cycle.

In this type of loan, you lend a certain amount from your financing institution or lender and repay the loan in installments. Personal loans, home loans, and private installment loans in Canada are some examples of installment credit.


Revolving Credit

Revolving credit is a type of lending option that offers you flexibility in the term of repayment and replenishes the credit limit as soon as you pay the existing debt.

In this type of lending option, you do not borrow an upfront amount; instead, get a line of credit with a predefined maximum credit limit that you can borrow. You have to pay the borrowed amount on the payment due date. You can also postpone the payment by paying a minimum due amount and can also pay before the due date if you got money.

Credit cards and personal lines of credit are the two most common options of revolving credit. However, some private lenders are also offering revolving or variable credit loans nowadays that allow you to borrow the money as an installment credit but offer the freedom of repayment of revolving credit.

Flexiloans is a lending platform that offers revolving or rotating credit in Canada. You can even avail of the rotating credit short term loan with a bad credit score.

So this is the basic difference between revolving credit and installment credit. Both lending types are good in their own ways and have their pros and cons.

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