Installment loans are a product that appears more and more often in the offer of non-bank institutions. All because many borrowers have become accustomed to this repayment mode over the years. It is clear and legible for them, but it also allows you to take out a loan without worrying about how much money you will be able to accumulate, as you would with a standard payday loan. It is also a flexible product that within one offer can be easily adapted to different needs. On the other hand, low installments are an indicator o
Low installments – when to pay attention to them?
In order for low installments to be really low, it must happen that the loan amount is equally low or the repayment period is as long as possible. The success of the loan repayment mainly depends on it. Of course, if we need a specific, high amount, the ability to manipulate loan parameters is quite limited, and if you want to spend small amounts monthly on a loan, only the maximum extension of the repayment period remains. Let’s see how low installments can be with average and maximum loan amounts.
The above examples show that with the highest amounts, the possibility of getting a low monthly installment exists only if the loan repayment is spread over the maximum period.
A low installment is not always a cheap loan
Most people use the low installment = cheap loan scheme. This is not entirely true and you should absolutely not stick to it. It will be true in a monthly perspective, but not in an annual or comprehensive perspective. This is due to the long administration time of loan repayment and the costs that the loan company must therefore incur. It is also a compensation for any risk of default by the borrower. However, from a certain point, these costs will not increase proportionally and at an alarming rate.
Borrower, be careful!
A long repayment period is very desirable, after all, it gives you greater financial freedom and the possibility of better planning of your monthly expenses, but it can also pose a significant risk to the borrower. It is necessary to take into account the disadvantages associated with the long repayment period resulting from low installments.
Although the issues outlined above are not general, and will depend on the predispositions and preferences of individual borrowers, it is worth considering them – more arguments for and against always allow a better picture of the situation and a deeper analysis of their own financial capabilities.