Revolving Loans for April 2024

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Royal Bank of Canada
I appreciate the transparency in the loan terms provided by Royal Bank of Canada, with no hidden fees or charges.
Royal Bank of Canada
RBC provided me with a flexible loan repayment schedule, making it easier to manage.
Royal Bank of Canada
I encountered some hidden fees when repaying the loan with RBC, making it more expensive than I expected.
Royal Bank of Canada
Unfortunately, the loan terms offered to me by RBC turned out to be less favorable than those of other banks.
Royal Bank of Canada
It's very convenient to use RBC's online services to manage my loan and make monthly payments.
Royal Bank of Canada
I obtained my home loan with RBC, and they were very flexible in setting terms that suited my financial capabilities.

What is a Revolving Loan?

A revolving loan, also referred to as a revolving credit facility or revolver, is a committed loan arrangement that allows borrowers to access funds up to a predetermined credit limit, repay the borrowed amount, and then re-borrow as needed. Unlike term loans, which cannot be re-borrowed once repaid, revolving loans offer a flexible and ongoing source of credit. The borrower has the ability to utilize the revolving credit line repeatedly, making it a convenient financial tool for various purposes, such as day-to-day expenses or covering unexpected costs.

These loans are not amortized, and the commitment amount may be adjusted over time. Conditions precedent must be satisfied for re-borrowing, and the outstanding revolving loan amount should be within the aggregate commitments of all revolving lenders. Common examples of revolving credit include credit cards, personal lines of credit, and home equity lines of credit (HELOCs). Revolving credit, with its flexibility and convenience, is often utilized for its ease of access and repayment adaptability.


  1. Credit Limit. Borrowers are assigned a maximum credit limit, determining the highest amount they can borrow. This limit is flexible and can be used repeatedly as long as it is not exceeded.

  2. Interest Charges. Interest is charged only on the amount of credit utilized, not the entire credit limit. This feature distinguishes revolving credit from installment credit accounts, where interest is applied to the entire loan amount.

  3. Minimum Payments. Borrowers are typically required to make minimum monthly payments. These payments ensure that the credit account remains in good standing, even though there is no fixed repayment schedule.

  4. Credit Utilization. The percentage of available credit used, known as credit utilization, impacts credit scores. It is advisable to keep credit utilization around 30% or less to maintain a positive credit score.

  5. Variable Interest Rates. Revolving credit often comes with variable interest rates, which means the interest rate can change based on market conditions. This can lead to fluctuations in the cost of borrowing.

  6. Secured and Unsecured Options. Revolving credit can be secured or unsecured. For example, credit cards are often unsecured, while a Home Equity Line of Credit (HELOC) is secured by the borrower's home equity.

Pros and Cons


Quick Access to Funds. Revolving credit provides instant access to funds, offering a convenient solution for immediate financial needs or emergencies.

Repayment Flexibility. Borrowers have the flexibility to repay the borrowed amount on their schedule, making it easier to manage their finances.

Only Pay for What You Use. Interest is charged only on the amount borrowed, providing cost savings compared to traditional installment loans.


Higher Interest Rates. Revolving credit often comes with higher interest rates compared to installment loans, potentially leading to increased borrowing costs.

Risk of Unmanageable Balances. The ease of access to funds may tempt individuals to accumulate unmanageable debt, especially without a structured repayment plan.

Credit Score Impact. Late payments or high credit utilization can negatively impact credit scores, affecting the borrower's overall creditworthiness.

How to Get a Revolving Loan

Apply for a Loan

  1. Check Your Credit Score. Before applying for a revolving loan, review your credit score. Higher credit scores increase your chances of approval and may qualify you for better terms.

  2. Understand Your Financial Situation. Assess your financial needs and determine the appropriate type of revolving credit. Consider factors such as credit limit requirements and interest rates.

  3. Research Lenders. Explore financial institutions, banks, and credit unions that offer revolving credit products. Compare interest rates, fees, and terms to find the most suitable option.

  4. Gather Necessary Documents. Prepare the required documentation, including proof of income, employment details, and any other documents specified by the lender. Different lenders may have varying documentation requirements.

  5. Apply Online or In-Person. Depending on the lender, you can apply for a revolving loan online or visit a local branch. Complete the application form with accurate information.

  6. Wait for Approval. After submitting your application, the lender will review your creditworthiness and financial details. Approval timelines vary, but some lenders offer instant decisions for credit cards.

  7. Review Terms and Conditions. Once approved, carefully review the terms and conditions of the revolving credit. Pay attention to interest rates, credit limits, fees, and any other relevant details.

  8. Accept the Offer. If satisfied with the terms, accept the offer as per the lender's instructions. This may involve signing an agreement or electronically accepting the terms online.

  9. Activate Your Revolving Account. For credit cards or certain types of revolving credit, you may need to activate your account before using it. Follow the provided instructions for activation.

  10. Start Using the Revolving Credit. Once activated, you can start using the revolving credit within the approved credit limit. Be mindful of the terms, make payments on time, and manage your credit responsibly.


  1. Credit Score. Lenders typically have minimum credit score requirements. A higher credit score enhances the likelihood of approval and may qualify borrowers for better terms.

  2. Income Verification. Borrowers are often required to provide proof of income to demonstrate their ability to repay the borrowed amount. This may include recent pay stubs, tax returns, or other income documentation.

  3. Employment Stability. Lenders may consider the stability of the borrower's employment. A steady job history can be a positive factor in the approval process.

  4. Debt-to-Income Ratio. Lenders assess the borrower's debt-to-income ratio, which compares their monthly debt obligations to their income. A lower ratio is generally favorable for loan approval.

  5. Credit History. A positive credit history, including a record of timely payments and responsible credit use, can strengthen the borrower's application.


  1. Credit Limit. Lenders specify a credit limit, indicating the maximum amount borrowers can access. The credit limit is determined based on the borrower's creditworthiness and financial profile.

  2. Interest Rates. Lenders set interest rates for the borrowed amount. Rates may be fixed or variable and can vary based on factors such as credit score, market conditions, and the type of revolving credit.

  3. Fees. Lenders may impose fees, including annual fees, transaction fees, and cash advance fees. Borrowers need to be aware of these fees and factor them into their financial planning.

  4. Repayment Terms. While revolving credit offers repayment flexibility, lenders may set specific terms for minimum payments and may charge penalties for late payments.

  5. Grace Periods. Some lenders provide a grace period during which no interest is charged on new purchases if the balance is paid in full by the due date. Understanding the grace period is essential for managing interest costs.

  6. Credit Score Impact. Lenders may provide information on how the use of revolving credit can impact the borrower's credit score. This includes factors like credit utilization and the importance of making timely payments.

  7. Rewards and Benefits. For credit cards, lenders may offer rewards programs, cash back, or other benefits. Borrowers should be aware of these perks and choose a product that aligns with their preferences.

  8. Security Requirements (for Secured Credit). In the case of secured revolving credit, such as a Home Equity Line of Credit (HELOC), lenders may outline the security requirements and the potential consequences of default, including the risk of collateral seizure.

Best Places to Get a Revolving Loan

  1. CIBC Aventura Gold Visa is estimated to generate over $400 in rewards annually, factoring in its $139 annual fee. Boasting a commendable earn rate on everyday spending, this card offers travelers significant perks, including four complimentary airport lounge visits each year, a rebate on NEXUS application fees every four years, and comprehensive travel insurance coverage. Aventura points cover the full airfare, including taxes and fees, enhancing the overall value for cardholders. While the annual fee is $139, it's important to note that the card lacks trip cancellation or interruption coverage.

  2. Tangerine, an online financial institution, stands out for offering competitive rates on lines of credit. Their prime rate is 7.20%, and their unsecured line of credit is advertised with a starting rate of 9.20%, calculated as 2% plus interest. Tangerine's variable interest rates provide flexibility but may fluctuate throughout the term. For those considering a Home Equity Line of Credit (HELOC), the current rate stands at 7.70%, offering an additional option for homeowners seeking financial solutions. Tangerine's approach emphasizes online accessibility and transparent terms for borrowers.

  3. Vancity Credit Union presents diverse options for lines of credit, tailoring rates based on the borrower's credit limit and credit score. For Lines of Credit (LOC) exceeding $5,000, the rate is determined by Vancity Prime plus Increment. Meanwhile, those seeking a line of credit below $5,000 encounter a fixed interest rate of 17.75%. Vancity Credit Union's approach prioritizes flexibility and inclusivity, ensuring that individuals with varying credit needs can access financial solutions that align with their specific requirements.

  4. Desjardins offers a Home Equity Line of Credit (HELOC) that allows homeowners to leverage their property's equity for financing or refinancing purposes. Secured by the property, the HELOC enables access to a portion of the repaid principal as a loan. Eligibility is determined by factors such as a minimum 20% down payment during home purchase or having repaid at least 20% of the home's determined value. The Versatile Line of Credit from Desjardins provides flexibility for home financing and projects, with the tied loan option operating akin to a traditional mortgage.

Things to Pay Attention to

  1. Interest Rates. Understand the interest rates associated with the revolving credit. Be aware of whether the rates are fixed or variable, and how they may impact the overall cost of borrowing.

  2. Fees and Charges. Pay attention to any fees associated with the revolving credit, including annual fees, transaction fees, cash advance fees, and late payment penalties. Consider these fees in your financial planning.

  3. Credit Limit. Know your credit limit, which represents the maximum amount you can borrow. Staying within this limit is crucial to avoiding overborrowing and potential negative impacts on your credit score.

  4. Repayment Terms. Review the repayment terms, including minimum payment requirements and due dates. Understand the consequences of late payments and the impact on interest charges.

  5. Grace Period. If applicable, be aware of any grace periods offered by the lender. Understand the conditions for interest-free periods on new purchases and the importance of paying balances in full within the specified time frame.

  6. Credit Utilization. Monitor your credit utilization ratio, which is the percentage of your available credit that you've used. Keeping this ratio low, ideally below 30%, can positively impact your credit score.

  7. Impact on Credit Score. Understand how your use of revolving credit can affect your credit score. Late payments, high credit utilization, and other factors may hurt your creditworthiness.

  8. Communication with Lender. Maintain open communication with the lender. If you anticipate difficulties in making payments or have questions about the terms, contact the lender to discuss your situation.

  9. Review Statements. Regularly review your credit statements to check for accuracy, and unauthorized transactions, and to monitor your overall financial health.

How to Repay a Revolving Loan

  1. Understand Minimum Payments. Know the minimum payment required by your lender. This is the smallest amount you must pay by the due date to keep the revolving credit account in good standing.

  2. Payment Due Dates. Be aware of your payment due dates. Missing a due date may result in late fees and negatively impact your credit score.

  3. Set Up Automatic Payments. Consider setting up automatic payments for at least the minimum amount due. This helps ensure timely payments and avoids late fees.

  4. Pay More Than the Minimum. If possible, pay more than the minimum amount due. This helps reduce the overall balance and interest charges, saving you money in the long run.

  5. Monitor Credit Utilization. Keep an eye on your credit utilization ratio. Aim to keep it below 30% to maintain a positive impact on your credit score.

  6. Avoid Overborrowing. While revolving credit allows flexibility, avoid overborrowing. Borrow only what you can comfortably repay to prevent accumulating excessive debt.

  7. Regularly Review Statements. Regularly review your credit statements to check for accuracy, and unauthorized transactions, and to monitor your overall credit health.

  8. Consider Snowball or Avalanche Methods. If you have multiple revolving loans, consider debt repayment strategies like the snowball method (paying off the smallest balances first) or the avalanche method (paying off the highest interest balances first).

  9. Communicate with Lender. If you anticipate difficulties in making payments, contact your lender in advance. They may offer temporary solutions or alternatives to help you manage your repayments.

  10. Consider Debt Consolidation. If you have multiple revolving loans with high interest rates, explore options for debt consolidation. This can simplify payments and potentially reduce interest costs.

Reasons for Getting Rejected for a Revolving Loan

  1. Low Credit Score. A low credit score is a significant factor in loan approval. Lenders may reject applications from individuals with poor credit history, indicating a higher risk of default.

  2. Insufficient Income. Lenders assess your income to ensure you have the financial capacity to repay the borrowed amount. If your income is deemed insufficient, it may lead to rejection.

  3. High Debt-to-Income Ratio. A high debt-to-income ratio, where your existing debt obligations are substantial compared to your income, may signal financial strain and result in rejection.

  4. Limited Credit History. Lack of credit history or a limited credit history can make it challenging for lenders to assess your creditworthiness. Some lenders may prefer applicants with a demonstrated credit history.

  5. Recent Late Payments. Recent late payments on revolving credit accounts may raise concerns for lenders. Timely payment history is crucial for demonstrating financial responsibility.

  6. Bankruptcy or Foreclosure. A history of bankruptcy or foreclosure can significantly impact creditworthiness, leading to the rejection of loan applications.

  7. Multiple Recent Credit Inquiries. Too many recent inquiries on your credit report may signal desperation for credit, making lenders cautious. Each inquiry can temporarily lower your credit score.


  1. Pawnshop loan. A pawnshop loan is a short-term, collateral-based loan where a borrower provides a valuable item, such as jewelry or electronics, as collateral in exchange for a loan from a pawnshop. The loan amount is typically a fraction of the item's appraised value, and the borrower has a set period, often 30 days, to repay the loan along with interest. If the borrower fails to repay, the pawnshop retains ownership of the item.

  2. Credit builder loan. A credit builder loan is a financial product designed to help individuals establish or improve their credit history. Unlike traditional loans where the funds are disbursed upfront, with a credit builder loan, the borrower makes regular payments into a savings account or certificate of deposit. Once the predetermined term is complete, the borrower receives the total amount paid, and the positive payment history is reported to credit bureaus, contributing to improved credit scores.

  3. Peer-to-peer lending. Peer-to-peer lending, often abbreviated as P2P lending, is a digital lending platform that connects individuals or "peers" looking to borrow money with investors willing to lend funds. This type of lending cuts out traditional financial institutions, allowing borrowers to access loans with potentially lower interest rates. The lending process is facilitated through online platforms that match borrowers with investors based on various criteria, creating a decentralized lending environment.

  4. Title loan. A title loan is a short-term, secured loan where borrowers use their vehicle's title as collateral. The loan amount is typically a percentage of the car's appraised value. If the borrower fails to repay the loan, the lender can repossess and sell the vehicle to recover the outstanding amount. Title loans often have high interest rates and fees, making them a relatively expensive form of borrowing. These loans are popular among individuals with poor credit, as the vehicle's title serves as security for the lender.

Editorial Opinion

Revolving loans offer a flexible and accessible form of credit that can serve various financial needs. The ability to borrow, repay, and re-borrow within a predetermined credit limit provides convenience for individuals managing day-to-day expenses or unexpected financial obligations. This versatility, often associated with credit cards, personal lines of credit, and home equity lines of credit, enables users to tailor their borrowing to their specific requirements. However, borrowers need to exercise financial discipline and be mindful of potential drawbacks, such as higher interest rates and the risk of overborrowing.


Keeping your Debt-to-Income (DTI) ratio below 30-40% of your monthly income is crucial. This will help you avoid potential financial problems in the future. Additionally, always assess the necessity and feasibility of taking a loan, ensuring you can comfortably manage its repayment.

How to Choose a Lender

  1. Make sure to confirm whether the lender is licensed to operate in your province. You can verify this information with your state regulator or attorney general.

  2. Check if the lender is a member of a reputable association, such as the Canadian Lenders Association (CLA). Membership in such organizations may provide an extra level of reliability.

  3. Carefully review all the terms and conditions of your payday loan contract.

  4. Thoroughly examine the interest rates on payday loans and ensure that your contract includes a detailed breakdown of the total cost of the loan.

  5. Take advantage of your right of rescission. Usually, you can rescind the loan within three days after signing the agreement. Alternatively, there is typically a "cooling-off" period, which allows you several days to thoroughly review the contract before making an informed decision to enter into a consumer loan agreement based on the terms specified by the lender.

  6. Choosing a payday lender is a significant decision that demands careful consideration and a good understanding of how such organizations operate.


At Finanso, we've carried out a comprehensive analysis of over 70 lenders, assessing them based on 35 different parameters across six key categories: accessibility of loans, customer relations, quality of service, interest rates, and transparency of conditions.

In each category, we carefully considered the most critical factors in selecting a lender. These factors include the interest rates, available loan amounts, minimum credit score, minimum income, application fees, and the speed at which funds are transferred.

At Finanso, we highly value our users, which is why we also focus on the quality of customer service, user reviews, and additional features that can aid our users in making a well-informed decision.

Our ultimate goal is to provide insightful recommendations and expert advice to assist you in selecting a lender that best caters to your specific needs.


What is the disadvantage of a revolving credit facility?

One disadvantage of a revolving credit facility lies in the potential for users to accumulate unmanageable debt. The flexibility that allows borrowers to repeatedly access funds can lead to overspending without a structured repayment plan.

Without the discipline to make consistent and timely payments, individuals may find themselves in a cycle of revolving debt, facing higher interest charges and potential negative impacts on their credit scores.

Responsible financial management is crucial to mitigate this risk and ensure that the advantages of a revolving credit facility are not overshadowed by the drawbacks.

What is the difference between revolving credit and regular

The primary difference between revolving credit and regular credit lies in the repayment structure. Revolving credit, as exemplified by credit cards and lines of credit, allows users to borrow, repay, and re-borrow within a specified credit limit, without a fixed repayment term.

Regular credit, on the other hand, typically refers to installment credit, such as personal loans or auto loans, where borrowers receive a lump sum amount upfront and repay it in fixed installments over a predetermined period. While revolving credit provides flexibility, regular credit follows a more structured repayment plan.

What is the most common revolving credit?

Credit cards are the most common form of revolving credit. They provide users with a predetermined credit limit, and individuals can make purchases up to that limit. The outstanding balance can be repaid in full or through minimum payments, offering flexibility in managing expenses.

With revolving credit, users have the option to carry a balance from month to month, and the credit limit is replenished as payments are made. Credit cards are widely used for everyday purchases, and emergencies, and the convenience they offer in managing short-term financial needs.

Loan Terms