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Simple English definitions for legal terms
revolving loan
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A quick definition of revolving loan:
A revolving loan is a type of loan that can be renewed when it is due. This means that the borrower can keep borrowing money as long as they pay back what they owe. It's like having a credit card, but instead of buying things, you're borrowing money. The borrower can use the money for anything they need, like buying a car or paying for school. However, they will have to pay interest on the money they borrow.A more thorough explanation:
A revolving loan is a type of loan that can be renewed at maturity. This means that the borrower can continue to borrow money as long as they pay back what they owe. For example, a credit card is a type of revolving loan. The borrower can use the credit card to make purchases and pay back the balance over time. Once the balance is paid off, the borrower can continue to use the credit card to make purchases.
Another example of a revolving loan is a home equity line of credit. The borrower can borrow money against the equity in their home and pay it back over time. Once the balance is paid off, the borrower can continue to borrow money against the equity in their home.
Revolving loans are useful for borrowers who need access to funds over a long period of time. They are also useful for lenders because they can earn interest on the money that is borrowed.