Is a Revolving Loan Suitable for Me?
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Revolving loan is an open credit line with a specific agreed amount. Perfect examples of this kind of loan are credit cards and overdrafts. Some people apply for a credit card and some get pre-approved automatically especially those who has a good credit history. Wondering if revolving loan is suitable for them really depends on how he/she manages his/her own expenses. Using credit cards are particularly tempting because it gives you the immediate license to spend money and if not controlled, it can lead to debt. Because revolving credit is readily accessible to be utilized, it provides funds for emergencies or can be used for business purposes.
When the part of the balance of the loan has been repaid, you do not need to re-apply again for the loan amount to be back on its original amount. This type of loan is especially useful for business owners to help track business expenses in detail and determine accurately the cash flow in reviewing budgets and balance sheets. This also saves business owners the hassles of the lengthy process of applying for a small business loan to get funding for business expansion or buying new equipment.
Revolving loans is suitable to use if:
• You are the type of person who can control and manage own funds without going beyond your limits.
• You can spend within your means.
• You are a business owner who wants to track business expenses in detail
• You are a business owner who wants to buy equipment for business needs
• You are a business owner who wants to use funds for business expansion
• You are a kind of person who wants an immediate contingency funds during emergencies (accidents or unpredicted circumstances)
Revolving loans can actually make or break you in applying for a business loan if you choose to get one because revolving loans provide a tangible credit history.
Being financially responsible is one of the major qualities that lending institutions are looking for especially for businessmen or potential business owners. A good credit history reflected in your revolving loan statements can show the bank that you are financially committed in your loan repayments and will do the same in your future loans. So be careful in deciding or using you revolving credit because it can bring you at the top or bottom of your financial standing.