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What is the disadvantage of a low installment loan?

It is a logical and easy-to-fit solution if you choose the type of loan and the installment level according to how much you can pay from month to month.


The monthly installment can’t be too high

The monthly installment can

It is undoubtedly convenient to adjust our installment to fit in with our monthly budget. This is also practically the only way we can repay the loan, as we cannot stop paying. The lender shall reimburse this by default interest.

But the rarely mentioned drawback to too long a maturity is that we pay more – the same for THM.


Loans are fixed

Loans are fixed

Customers usually take out very large amounts of home loans today. This becomes clear when you look at current home prices. Previously, the amount of credit over $ 10 million was rare, but now it has become commonplace, as it is not 3-4 million, but several times that amount, that is missed for the desired home.

There are several factors that regulate the repayment method: besides the obligatory deductible, the debt brake also determines the maximum amount we can pay as a monthly installment.

In principle, it is safest to pay small installments over a long period of time. However, many people do not accidentally choose the final or early repayment. Long repayments cost a lot for each type of loan – something that a bank employee might not say.

For example, many are concerned with home loans, and by this step, a large proportion of borrowers have responded to the issue of high prices and the high amounts involved, with an extended period.


Precious years

low installment loans

It is more costly to use bank money. For a $ 10 million loan, a 5-year maturity difference can reach $ 1.4 million – even though the APR (Total Credit Rate) is the same. The difference lies in the amount to be repaid in addition to the capital.

What can we do? If you have committed to a repayment for an extended period of time, it is worthwhile to be able to make use of the prepayment and final repayment. There is no need to be afraid of these solutions, even though they have a fixed fee, we still gain far more than we lose.

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