Forgóhiteles

Forgóhiteles is a Hungarian term that translates to revolving credit or line of credit in English. It represents a flexible loan arrangement where a borrower can access funds repeatedly up to a predetermined limit. Unlike a traditional installment loan where a fixed amount is borrowed and repaid over time, a forgóhiteles allows the borrower to draw down, repay, and redraw funds as needed.

This type of credit facility is commonly used by businesses to manage their short-term working capital needs. For example, a company might use a forgóhiteles to cover payroll, purchase inventory, or bridge temporary cash flow gaps. The borrower typically pays interest only on the amount they have actually borrowed, not on the entire credit limit.

The terms of a forgóhiteles, including the credit limit, interest rate, and any associated fees, are agreed upon between the borrower and the financial institution. Repayment often involves making minimum payments that may include interest and a portion of the principal, or the borrower can choose to repay the entire outstanding balance. As funds are repaid, they become available again for borrowing. This flexibility makes forgóhiteles a valuable tool for managing fluctuating financial demands.