Consumer or installment loans are one of the most important types of credit for banks and savings banks. Some of these are offered as so-called framework loans. With this special type of consumer loan, the loan amount as well as the repayment is flexible.
You can usually expect a credit line of up to 25,000 USD with a credit line. The borrower can decide for himself whether this credit line will be fully utilized. Repayment is just as flexible. The bank only requires a minimum amount.
Loans with flexible repayment – then they should be used
A loan with a flexible repayment can best be compared to an overdraft facility that can be applied for in a checking account. However, a higher loan amount is possible with a credit line. Such a loan is particularly recommended if a shortage of payments is to be bridged at short notice. In the long term, it is not advisable to exhaust such a loan. Interest rates are too high to make this worthwhile. In such a case, driving with a simple installment loan is much better.
Loans with flexible repayment – that’s how they work
Loans with flexible repayment can be obtained from banks with a branch system and on the Internet. Since the interest rates are quite high, the different offers should be compared exactly. It is advisable to always check with the house bank first. Here you know each other and can best assess the borrower’s payment behavior. Most of the time, interest rates are therefore somewhat lower than at a credit institution that has not yet worked with the potential borrower.
Depending on the extent to which the loan is exhausted, the monthly interest is due. If you don’t use the loan, you don’t have to pay any interest. If you use it, you only pay interest on the amount that you really called. The credit line does not end after use, but must be canceled. It can therefore last for many years without being used or accessed. As a user of such a loan, you are therefore very flexible and not tied to any fixed agreements. You pay this “freedom” with higher interest rates.