Revolving or depreciable credit, how to choose well?

Should we apply for revolving or amortizable credit? What are the differences between these two consumer credit solutions? Everything you need to know to guide your choice.

Revolving or depreciable credit: how to choose?

Revolving or depreciable credit: how to choose?

Revolving and depreciable credit are two types of credit without proof of use of money. The similarities end there, or almost. Let’s put these two credits face to face, in order to more easily identify their differences.

  Revolving credit Depreciable credit
APR rate Revisable Fixed
Reusable credit amount? Yes No
Amount Generally less than 4000 USD Generally $ 1,000 to $ 75,000
duration 36 months maximum up to 3000 USD 6 to 84 months
Monthly fees Likely to evolve based on reuse of money Known in advance

The revised APR * rate (annual effective annual rate) for revolving credit contrasts with the fixed rate for depreciable credit. It is indeed a credit which, as its name suggests, can be reused over time. Revolving credit indeed makes it possible to draw at any time from an available reserve of money. The “available” is reconstituted at the same time as the current reimbursements. A request to use the available money can be taken into account in just 24 hours. It is a real fast credit: money can arrive on the account in 24h to 48h. This flexibility of use obviously does not affect the rate. Let’s review the pros and cons of revolving credit.

Understanding the APR rate

Benefits of revolving credit 

  • Possibility of express transfer of the amount available in the reserve
  • Easier to Obtain than Depreciable Credit
  • Possibility to reimburse partially or fully in advance
  • Sometimes associated with a credit card

Disadvantages of revolving credit

  • APR rate generally higher than those of depreciable credit
  • Risk of debt when the reserve is misused

Depreciable credit, to finance a real project

Depreciable credit, to finance a real project

Auto loan, work loan or simple personal loan without proof of use: amortizable credit is more suitable than renewable to finance a project over time. This is the reason why it is associated with an amount greater than 4000 USD on our comparator. Depreciable credit is subject to more supporting documents than for a small revolving credit, but the rates are more advantageous.

Benefits of Depreciable Credit

  • Fixed APR rate and monthly payments without surprise
  • More attractive rate than those of revolving credit
  • Possibility to reimburse partially or fully in advance

The choice of depreciable credit is therefore more coherent to finance an identified project. Car credit requires, for example, providing a purchase order and obtaining better rates. The same goes for the work loan, which usually involves delivering a quote or an invoice. Revolving credit is useful for financing a small purchase. Relatively expensive, it is interesting when it is reimbursed over a short period.

Good to know: credit organizations generally put forward their revolving credit offers forward when the amount is less than 3000 or 4000 USD. However, the law obliges specialists to also offer a depreciable credit solution for any request for credit of 1000 USD or more.