No. of Recommendations: 0

<<<A revolving loan is one in which you can borrow, pay and reborrow. Any installment loan that allows you to prepay in whole or in part without penalty does not become a revolving loan just because "you pick how much to pay, subject to a minimum".>>>

"Thanks for the clarification. I knew the typical characteristics, but never thought about the definition of revolving versus installment."

You are welcome.

You had it sort of covered by your use of "open-ended" if you were using in a very technical sense, and I just wanted to clarify.

Revolve describes the potential principal balance amount, whereas for an installment loan (barring late payments and defaults) timely payments mean that the principal balance always declines (and principal, once repaid, cannot be re-borrowed). For example consider the primary difference between a HELOC and HEL.

Regards, JAFO
Print the post  


UGC Disclosure Notice Regarding Credit Card Posts
Community board discussions about credit cards are not provided or commissioned by banks who may have advertising relationships with The Motley Fool. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
TMF Credit Center
The Motley Fool Credit Center arms you with real tools and simple messages, that will help you in every credit situation.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.