When it comes to obtaining credit, there are many different types of loans for many different uses, from buying a home to paying for education and remodeling. When it comes to the way those loans are repaid, two of the most common are installment and revolving.
Let’s take a look at the fundamental differences of each.
As stated in this article, an installment loan is a lump sum of money that is often used to pay for a purchase – like a house, a car or home repairs – and which the consumer pays back to the lender on a monthly basis (installments) with added interest until the loan is paid in full. The loan is typically made for a set period of time – or term – and borrowers cannot add more money to the loan unless they submit an additional credit application.
Installment loans can be a good tool to consolidate debt from high-interest credit cards or generally for situations where the consumer knows the specific amount they will need.
BBVA Compass offers a variety of installment loans, including its fully digital BBVA Compass Express Personal Loan.
When opened online, the Express Personal Loan is an unsecured loan ranging from $2,000 to $35,000. Those applying in a branch can receive up to $100,000. For eligible applicants, only a signature is needed, and customers who have their loan payments auto-debited from a BBVA Compass consumer checking account can receive a one percent interest rate discount. BBVA Compass also offers a service that soft-pulls interested consumers’ credit for pre-qualification purposes, giving them the ability to check their estimated rate and see potential loan options without affecting their credit score.
A revolving loan, also called revolving credit, is a sum of money – or line of credit – against which consumers can draw to make purchases. When a payment is made each month, the revolving line of credit replenishes itself. A revolving loan may or may not have a specific end date, and most do not have specified monthly payments, other than the minimum amount due each month.
Examples of revolving loans include credit cards and home equity lines of credit (HELOC). The uses for revolving loans vary widely and may include things like home remodeling, travel and other expenses.
Revolving loans sometimes have interest rates that vary, so it’s important to understand the terms and conditions of the loan.
To read more about BBVA Compass credit card offerings, click here.
For BBVA Compass HELOC offerings, click here.