A simple guide to revolving loans
Life is full of surprises, some exciting, some expensive. Whether it’s long-term home renovations, ongoing medical bills, or navigating those never-ending back-to-school expenses, access to extra funds can make all the difference.
That’s where a flexible lending option, such as a Revolving Loan from Standard Bank, can come in handy, as it gives you the ability to re-access your paid-off funds or increase your loan limit when you need it most.
So, what exactly is a revolving loan, and when does it make sense to use one?
What is a revolving loan?
A revolving loan, also known as a revolving credit plan (RCP), gives you access to a line of credit that you can use as needed.
The amount you qualified for is paid into your transactional account, and once you pay back 15% of that amount, you can reborrow the funds again without having to re-apply for a new loan.
How does a revolving loan work?
Like any other loan, you’ll need to make monthly repayments, but the key advantage of a revolving loan is that you can re-use your credit facility without it affecting your monthly debit order.
For example, if you’ve applied for a revolving loan of R100 000, and you’ve repaid at least 15% of the full loan amount (in this case R15 000), you will be able to re-access the R15 000. If you repay 50% of the loan, you can re-access R50 000.
What makes a revolving loan different to other credit options?
- A personal term loan gives you a fixed amount that you repay in set monthly instalments; once it’s settled, the credit agreement ends.
- A credit card is a type of revolving credit as it lets you borrow and repay on a revolving basis. The money isn’t paid in a lump sum; you have access to use up to a certain amount, and it has less structured repayments.
- A revolving loan is a specific credit facility that gives you the predictability of a loan with the flexibility to re-access funds once you’ve repaid 15% of it without needing to reapply.
Let’s look at some real-life scenarios where a revolving loan can be a valuable financial tool:
Being prepared for planned and unplanned expenses
You’re thinking of renovating your home. You may not know the total repair cost upfront, but work needs to start. The flexibility of drawing only what’s needed is ideal.
Cover ongoing medical costs
From monthly treatments and prescriptions to surprise procedures and coverage shortfalls, healthcare costs can change over time. Being able to tap into available funds over time helps you manage these changes without financial strain.
Funding education, bit by bit
Paying for short courses, extra books or school trips? These costs don’t always come at once. Having the freedom to pay as you go means you’re never caught off guard.
Navigate seasonal spending
Birthdays, holidays, or visiting family can quickly add up. Instead of stretching your budget, draw what’s needed and repay at a pace that works for you.
Lifestyle upgrades over time
Upgrading old appliances that are costing more to maintain? Renovating room by room? Borrow only what you need, when you need it, and re-access money without the hassle of reapplying once you pay back 15% of your loan.
Last-minute family travel
When family lives overseas, emergencies can mean sudden travel. Having access to funds ensures peace of mind to get to where you need to be.
Note: As with any form of credit, it’s important to treat a revolving loan as a tool for specific needs, not as a source of readily available cash for impulse purchases.
A revolving loan isn’t a one-size-fits-all solution, but for the right situations, it offers practical flexibility and control. Apply for a Standard Bank Revolving Loan today to experience the convenience of a loan that’s there for life’s planned and unplanned moments.
*Terms and conditions apply.
Disclaimer: This article is solely intended for information. It does not constitute financial, tax or investment advice or recommendation. Please speak to a financial advisor or registered financial professional before making any financial decision(s).
Standard Bank, its subsidiaries or holding company, or any subsidiary of the holding company and all of its subsidiaries make no warranties or representations (implied or otherwise) as to the accuracy, completeness or fitness for purpose of the information provided in this article or that it is free from errors or omissions.
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