Terminating a Revolving Credit: Standard Consumer Credit Letters
The revolving credit or revolving credit is a form of consumer credit which consists of a banking organization to make available to the borrower a certain amount of money, freely usable. Subscribed for one year, this credit is renewed every year by tacit renewal. When can we terminate it? What type letter should I send?
When to initiate the cancellation of the revolving credit?
The lending institution that has granted the revolving credit must send the borrower three months before the anniversary date an information document to manage the contract, specifying the conditions applicable in the event of renewal and the terms of termination. Prior to 2005, the revolving credit could only be terminated at the time of this anniversary date, initiating the process at least three weeks in advance.
However, since the vote of the Chantelle law, a revolving credit is now cancellable at any time by sending the following standard mail by registered letter with acknowledgment of receipt. The borrower must then repay all the sums used according to the rules defined in the loan agreement.
Moreover, it should be known that in case of inactivity for more than two consecutive years, the revolving credit is automatically terminated by the organization. On the other hand, if the borrower does not use the cash reserve for one year, the revolving credit is simply suspended, but can still be reactivated at his request in the following year.
The standard letter terminating a revolving credit
Borrower DetailsContact Information Lender Organization
Subject: Termination of Revolving Credit No. (specify the file number)
I subscribed to a revolving credit with your organization on (specify the date of the signing of the loan agreement).
In accordance with the Chantelle law of January 28, 2005, I wish to put an end to this revolving credit and I ask you to terminate my contract from (specify the date of end of credit desired).
As provided by law, I agree to reimburse the amount of the credit already used under the terms of the loan agreement, and I waive the unused loan amount.
Please receive, Madam, Sir, the expression of my best feelings.
Name, First Name, Date & Signature