Creditworthiness is normal and good
The terms of a loan can be freely selected within a certain range. The longer these are, the lower the rates are. If you want to pay off your loan faster and have the financial means to do so, choose a shorter term with higher rates.
This has an impact on the actual loan amount, because the interest is naturally reduced by a short term. But the monthly rate depends especially on the income of the individual. Those who don’t earn that much money will choose a low-rate loan. Conversely, this means that you have to pay longer on this loan.
Advantages and disadvantages
A low rate loan has advantages and disadvantages. First of all, more interest has to be paid for this, because of course this depends on the term. The longer this is, the longer the interest has to be paid. That increases the loan amount. A major advantage of a low-rate loan is, of course, that the monthly borrower’s charge is manageable. This is the safe option for low earners.
The most flexible loan with fast payouts is the overdraft facility. If the creditworthiness is normal and good, one call to the house bank is enough and the credit line is expanded to include the required loan amount. However, this simple and convenient financing is not cost-effective. For example, the Bankil charges just under 17 percent interest for the unbeatably fast overdraft facility.
It is therefore advisable for every borrower to take the term short-term loan literally. We recommend converting the overdraft into a low-interest installment loan if possible within a few weeks. The savings in interest are enormous. If the statistically recorded average overdraft of 3,000 USD were used as a basis, the overdraft facility would cost about 500 USD interest per year.
What terms are possible
The maximum term for a loan is 120 months. Such terms are actually intended for real estate loans. There are therefore only a few beacons that offer such loans for conventional installment loans. However, you should also think about securing.
Even if the topic is not particularly popular, residual debt insurance should be taken out just in case. It is even possible that the banks make the completion of one dependent on approval of the loan. Although this makes the loan more expensive, the borrower and his family are also protected from financial ruin.