What do you expect from your 120-month loan? A quick and easy application process, a quick loan decision and the low-interest financing of a larger loan amount?
Long maturities promise to pay off big loan sums in small installments. Modern application procedures are fast and convenient. With information and suggestions we would like to achieve that you finance cheap.
Find out what loan offers you expect and how to save money. Also, why 120 months maturity for loans in difficult cases is not always optimally chosen.
Loan with 120 months term – target small installments
A loan with a term of 120 months nobody takes “just in between” on, in order to fulfill an ordinary consumer desire. For ordinary consumption, up to the purchase of cars, installment loans with medium maturity serve. Loans with very long terms complete borrowers who move larger sums of money. It would be conceivable, for example, to invest in stable assets.
Not infrequently there is a desire, after a realignment of the current loan obligations, behind the loan search. All in all, existing installment loans exhaust too much liquidity. The household budget becomes inflexible. In most cases, to balance the Dispo grows to an uncomfortable level. A financial liberation, especially in times of low interest rates, seems sensible.
By repaying the entire debt, now in 120 small monthly installments, the budget would again gain more scope for everyday needs. Perhaps even the fulfillment of a long-delayed wish to co-finance the same. Basically all good reasons to get involved in a loan with 120 months maturity. Damage can be a free offer comparison no case.
Long-term bank loan – offers
Overall, the trend in the German loan market is towards higher loan sums and longer maturities. This is noticeable in the comparison of previous loan offers with an excessively long term to today’s range. Good free loan comparisons show significantly more loan offerings with 120 months maturity than ever before. It is no longer just civil servants who are free to use long-term low-interest loans.
Currently there are 7 offers in the Creditend loan comparison, for example, if you are looking for a loan of € 18,000 with a term of 120 months. With regard to earlier loans, the interest rate level has also dropped significantly. Installment loans with a term of 10 years are now offered by banks that do not specialize in particular interested parties. Almost half of the loans are even offered for loan-independent lending.
120 months term – favorable financing costs?
With a long term interest rates have a significant impact. The currently lowest-interest loan with a term of 120 months costs 4.44 percent APR. (2/3 loan example Creditend). A total of 18,000 euros net loan amount at 10 years would lead to a borrowing cost of 4,232.25 euros. For the monthly installments would be 185.27 euros apparently very low.
The same net loan amount at 86 months, again financed at 4.44 percent APR, shows the effect of compound interest. The pure loan costs are reduced to 2,913.21 euros. A savings on the loan with 120 months duration of 1,319.04 euros. To save this money would have monthly only € 63.70 additional installment – monthly rate € 248.97 – be portable.
At the same time, the loan with a reduced term would no longer necessarily be the cheapest loan offer. For loans with an 86-month maturity, the 2/3 example currently shows 3.29 percent APR as the lowest-interest financing offer. At a monthly installment of € 231.23, the pure loan costs could be “melted down” to € 2,143.44.
Compared to the lowest-interest loan with a maturity of 10 years, a savings potential of 2,088.81 euros would be feasible. Additionally shouldering 45.96 euros monthly rate, pays off in terms of these numbers startlingly.
Loan debt restructuring in difficult cases – problem definition
Low lending rates make it easier to get into debt. Almost always, modern consumer wishes can be met comfortably on loan. Smaller sums unnoticed funded the Dispo. Often tacitly citizens live about their circumstances. Of course, the “income gap” has a share in this development. Small and medium incomes are just enough for the “necessary”.
The trend reversal is to bring about a loan with 120 months duration in difficult cases. All liabilities are summarized in the debt repayment loan. The repayment in small monthly installments creates the scope to maintain the usual quality of life. Unfortunately, in these cases it often happens that the personal loan rating for lending has already suffered at this stage of debt.
Only a few banks are willing to take on the risk of being granted very long-term financing, with a somewhat weaker loan rating. The risk compensation, within the tight tolerances of legal requirements for safe bank loan, create interest premiums. Risk loans are more expensive so that the bank can create reserves for the expected higher number of loan defaults.
Do not lose sight of financing costs – think about the term
loan with 10 years in difficult cases is recognizable more expensive. There are no alternatives for a private loan, for example, if you have 120 months to repay the loan. As a result, banks, such as Eifel Bank, play a special role. The few providers of risk loans have almost a monopoly position, which is ultimately reflected in the cost of loan.
For the exemplarily mentioned 18,000 euro loan with 120 months running time, would calculate by food bank, according to 2/3 example, 9,12 per cent effective annual interest. The monthly installment shows the representative example with 225.68 euros. From this installment, the total repayment of 27,081.76 euros for 18,000 euros net loan results. For the approved loan with 120 months in difficult cases, borrowers contribute 9,081.76 percent financing costs.
In other words, one third of the repayment is interest costs. In the face of such high costs, the question arises again whether 84 months are not enough. The monthly rate at 84 months, the same loan volume and interest rate, is 287.41 euros. The loan costs would be, in direct comparison to the loan with 120 months duration, reduced by 2939.12 euros.