Choosing installment loans, you can have more freedom in configuring its parameters. Short-term payday loans have a predefined repayment deadline of 30 days. During this time, you have to pay back the whole debt, which is too great a financial burden for some people. Loans for a long repayment period can be tailored to your own abilities, but you must remember about timely fulfillment of the commitment.
Repayment period of short-term liabilities and installment loans
When deciding on a specific offer, you must make a number of important decisions that affect your repayment. In addition to the amount, the loan period is also important because it is largely responsible for the amount of the entire liability. In the case of payday loans, there is not much choice because most offers on the market for 30 days. However, if you are thinking about an installment loan, you must know that the extended repayment period translates into higher amounts of additional fees. In practice, this means that when you pay back a loan faster, you will have to pay less for it.
How to choose the installment loan repayment period?
Before applying for a loan, you should always carefully analyze your financial situation. The incurring of large amounts that will not be repayable has many serious consequences in the form of entering into the bases of debtors or bailiff enforcement. As is already known, a shorter loan period is associated with lower additional fees, but this is not always a good solution. This can be illustrated by a simple example of a loan granted for a maximum amount of $ 10,000.
If you choose a loan period of 12 months, the total amount to be donated is $ 16050.97. However, you should pay attention to the installment amount, as it amounts to as much as $ 1337.61, which is already a significant financial burden. Not everyone will be able to save such an expense from the monthly household budget, which creates the risk of overdue debt settlement.
Although in this case the total amount to be repaid is higher and amounts to $ 19594.41, the monthly installment is only $ 816.44. This is a significant difference and is a safer solution for people who prefer to pay back their loan peacefully, without exposing themselves to a significant financial burden.
A longer installment loan repayment period means greater security
Sometimes it is difficult to predict what the financial situation will look like in the coming months. By maximally extending the loan period, you can be more sure that the loan installment repayment date is met. This solution has another advantage, because the debt can be repaid earlier. If your financial situation has stabilized and you have received a larger injection of cash that you want to spend on repayment, you do not have to wait until the loan period is over. You can save by paying all your debt earlier than the loan repayment schedule specifies. In that case, the interest that was applicable to the full loan period is deducted from the total amount.
How is the loan repayment date determined?
In addition to the loan period, it is also worth paying attention to the repayment date for subsequent installments. It should be remembered that it coincides with the date of granting the loan and lasts until the end of the loan period. This means that the loan repayment schedule is set according to the day it was granted. If the application was examined on the 9th of the month, subsequent installments will also have to be settled on that day. It is worth taking this into account so that the payment date falls later than the account receipts for pay for work or additional sources of income. This will keep financial liquidity and make it easier to pay off subsequent installments.
How much late can you pay the installment?
When setting a convenient payment date, remember to pay the due amount. This will avoid additional interest being charged for late payment of the installment. These are calculated from 1 day of delay, and each subsequent day generates higher costs. To make sure that the payment is received on time, it’s not worth leaving at the last minute. It is often the case that a transfer made in accordance with the repayment schedule can reach the lender’s account only the next day, which means the installment is not paid on time. Although the company provides clients with accounts for payments from many banks to maintain compatibility of interbank sessions, some situations cannot be predicted. Small technical problems at the bank are enough for the transfer to be delayed, so it’s safest to pay the day before the deadline.
The loan installment falls on the weekend – what to do?
When you take out a loan, you get an accurate repayment schedule, which makes it easier to control your payments. However, it may happen that the loan installment falls on a weekend, when many banks do not post transfers. In such cases, if the repayment date is a public holiday, the next installment will be moved to the next business day. Therefore, the installment payment date on Saturday automatically shifts to Monday. The same applies to Sunday, public holidays and other public holidays.
At this point it is worth mentioning one more problem that the lender may have with setting the payment date. It is a situation when the installment is set on the 31st day of the month. When to regulate it when the month is shorter? Contrary to the installment payment date on Sunday or another day off, in the case of a shorter month, the payment must be made earlier. So if it’s February and you have a payment schedule set for 31 day of each month, you must pay the installment on February 28 or 29 at the latest. It is worth remembering that it does not turn out that due to such an oversight the installment was increased by penalty interest.