Definition of Non-Revolving Credit

What is non-revolving credit? What is the definition of the term non-revolving credit?

Non-revolving credit is when credit is extended via a fixed repayment plan. As payments are paid on non-revolving credit plans, further credit is not extended (unlike in a revolving credit plan).

An example of non-revolving credit would be a car loan.

In a car loan, credit is extended and repaid through a fixed installment plan.

In the case of the majority of car loans, borrowers repay the loan over the course of 5 or 6 years.

As the payments are made, additional credit is not extended. Once the payments are finished, then the borrower no longer owes any more money.

Another example of non-revolving credit would be a student loan.

The opposite of non-revolving credit is revolving credit. In the case of revolving credit, credit is "replenished" when the borrower makes their payments.

An example of revolving credit would be a credit card. If you owe $2,000 and have a $10,000 limit, then you would have $8,000 in available credit. If you pay off the $2,000, then your available credit would rise back up to $10,000.


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