Are you considering a long term loan?

 

Extending the payout period will reduce your loan servicing costs on a monthly basis, but looking at the monthly installment alone will not help you find the cheapest loan.

When applying for a loan, the monthly installment should be scaled to suit your own finances. Only in this way can the repayment succeed in the conditions of one’s own finances, so that the repayment of the loan does not have to be stressed in everyday life. The monthly installment is easily reduced by extending the payout period, but on the flip side, the total cost of the loan increases with the payout time. Fortunately, payout time is not only the way to influence the monthly installment of a loan, but interest and other loan costs also play a big role.

Effect of payment period on monthly installment

Effect of payment period on monthly installment

A longer repayment period increases the monthly installment of the loan, but increases the interest or other costs on the loan. Take, for example, a USD 10,000 loan with three different payment schedules. The same annual interest rate of 9% has been used in all sample calculations.

By extending the loan period from two to eight years, the monthly installment of the loan is USD 310.35 lower while the interest rate increases by USD 3,099.6. Therefore, it is always a good idea to pay off the loan as soon as possible, which decreases the interest rate. Fortunately, in Finland, the law is on the consumer’s side and allows for early repayment or repayment of a loan without separate agreement on the terms of the loan or credit.

Payout time is not the only way to influence the cost of a loan

Payout time is not the only way to influence the cost of a loan

Although loan time plays a major role in the total cost of a loan, it is not the only thing worth looking at when borrowing. Let’s calculate what a USD 10,000 loan looks like if the interest rate is a lower percentage point, or 8%.

The difference in the interest rate on the loan yields saving from USD 492.48 over a period of eight years on a USD 10,000 loan. When you want to save on your loan costs, it is worth paying attention not only to the payment period, but also to the interest and other costs of the loan. The slight difference in percentage increases in an extra expense item of almost USD 500, which can be avoided by making a careful loan comparison before taking out a loan.

The loan or consumer credit can be tendered

The loan or consumer credit can be tendered

People are accustomed to being lazy to bid on new and existing loans. In Sweden, for example, up to 90% of new consumer loans are compared before the loan is selected. In Finland, on the other hand, less than 40% of consumers seeking consumer credit have even asked for a competing offer before choosing a credit, according to a study commissioned by Economic Survey.

Increased competition between banks and financial institutions has given consumers a whole new situation. At present, more players than ever before offer affordable interest rate loans. While loan prices have fallen after the fall law change, the importance of loan tendering has increased. Nowadays, the cheapest loan can be found even from an unknown lender.

Importance of bidding for a new loan

Importance of bidding for a new loan

When applying for a new loan, the importance of tendering is particularly important. You are likely to commit to a multi-year payment agreement that accrues to you in the form of interest or costs on a monthly basis. At the time of the drawdown, the main loan is at its highest, which means that the interest payable on it is the highest in euro terms. The higher the loan amount, the more important it is to tender for loans. Competitive bidding is an easy way to save on your loan costs and make the most of your saved money.

If you are planning to apply for a new loan, compete for free . Bidding takes a few minutes, but can bring you hundreds or even thousands of euros in savings during the loan period.

The savings that come with tendering for an old loan can be surprising

The savings that come with tendering for an old loan can be surprising

An old loan or consumer loan can also be tendered. Fortunately, loans and consumer loans are simple products that make less sense who has granted the loan. Instead, almost everyone would prefer to pay less interest or other costs on the loan. Even if saving on the current loan is ten euros per month, this will generate a total savings of 600 eurosover a five-year loan.

If you are interested in bidding on your current loan or consumer credit, you can use our calculator to look at your estimated savings.

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