A revolving loan is one where you have access to a continuous source of credit, up to a pre-determined credit limit. If the limit is say, $20,000, you can borrow any amount up to $20,000. And you can repay all or part of the amount you borrowed at a time of your choosing, within the overall tenor of the loan.

You pay interest only on the amount you borrow for the time you borrow it. Occasionally, banks may charge a commitment fee for making a revolving line of credit available to you.

You have a loan that's always available to you on demand. In addition, you can also re-borrow the amount you have repaid.

Installment loans have a fixed repayment schedule. In most situations, the full amount of the loan is drawn down at once and both repayment schedule and amounts are fixed in advance. You do not have the option to re-borrow the amount that has been repaid.

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