When looking for the right loan, the question always arises how long the loan should be repaid. In any case, it should be aware that the decision about the length of the term is associated with some consequences. Basically, the term is freely selectable, but the faster the loan is repaid, the smaller the total loan costs will be.
The cheapest: Short loan term
With short loan terms, the monthly repayments are higher. It is not necessarily the most popular term among borrowers, but it has many advantages:
- On the one hand, you can quickly pay off the debt,
- on the other hand, the interest and the total burden for loans with short terms are often significantly lower than for loans with long terms.
Experts always advise keeping the terms as short as possible.
Our tip: listen to experts and, if possible, always choose a shorter credit period. Also recommendable: Always calculate the available monthly financial scope well beforehand, and if in doubt keep it smaller than generous.
The most popular: long loan term
For a long loan term, lenders charge higher interest rates. At first glance illogical, because with the same loan amount you pay significantly more at the end of the long term than with the short one. But this has to do with the fact that the longer a loan is repaid, the higher the likelihood of lenders that customers can default. Lenders secure themselves through higher interest rates.
Our tip: If the interest and thus the total burden of long loan terms are relatively high, many lenders have the opportunity to negotiate the interest rates. Always ask if it would be possible. The question doesn't cost anything, but it can bring you some financial benefits. The decision between variable and fixed interest rates should also be carefully considered. At the moment, loan interest rates are very low, so a loan with fixed interest rates appears to be very advantageous - because if these rise later on the market, your interest rate remains the same thanks to the fixed interest rate agreement.