Getting a personal loan will be able to provide assistance to you with overcoming most of the financial struggles that you have. When you are borrowing a personal loan, you will have two main options available to consider. Either you can get the personal loan with a longer repayment term or with a shorter repayment term.
If you wish to settle down with a shorter repayment term for the personal loan, you will need to be aware of the pros and cons associated with it. This article will be able to deliver much-needed support and assistance you want.
What factors go into a personal loan repayment timetable?
When you are determining the repayment timetable of your personal loan, you will need to pay attention to a few important factors. Here are the most prominent factors out of them.
- Amount of money that you want to borrow
If you just want to get a personal loan to cover up medical bills or utility bills, you will be obtaining a smaller amount. Hence, you will be able to settle that amount within a short time period. But if you are planning to get a personal loan for a bigger expense such as a home renovation project, you will have to think about going for a longer repayment period. That’s because your income is not sufficient to pay the loan amount within a short time.
- Your expected monthly payment
After obtaining the personal loan, you will have to make repayments to it on a monthly basis. This is where you should understand how much you are willing to spend as monthly payments on the personal loan. If you want to keep the repayment amount minimum, you will have to settle down with a longer repayment time with your borrower.
What’s the advantage or disadvantage of paying off a consumer loan ASAP?
You can experience both benefits as well as drawbacks by paying off a personal loan as soon as possible. Let’s take a look at some of the benefits.
– You can easily get funding – If the repayment period is short, you will find it as an easy task to get the funding you need within a short period of time. In most of the instance, funding will be available in your account within a couple of business days.
– You can easily get approval – The time taken for short term personal loan approval is less. Even a person who has a bad credit rating can get it approved with ease.
– You can use it for emergency expenses – If you have an emergency expense such as a medical bill, the best option available to consider is a short term personal loan.
– Unsecured – You will not have to provide any collateral when obtaining the personal loan. Hence, you will not be risking any other asset that you have.
While keeping these benefits in mind, let’s take a look at the drawbacks of short term personal loan as well.
– You will have to pay high-interest rates – In most of the instances, you will be asked to pay a high rate of interest.
– It might cost you more than your credit card – If you have an interest free credit card, you should use it and settle the bills. Getting a personal loan will make you spend more money.
– High penalties – In case if you fail to make the repayment in a timely manner, you will have to experience higher penalties.
What’s the advantage or disadvantage of waiting as long as possible, based on the loan offer, to pay down a consumer loan?
Following are some of the benefits that you can experience by requesting for a longer repayment time for the personal loan.
– You can get affordable monthly payment amounts – Along with the longer repayment time period, your monthly repayment amount will be reduced. As a result, you can experience affordable monthly payments at all times.
– Competitive interest rates –You can request and get a competitive interest rate on your personal loan.
– You can borrow a bigger amount – If the repayment period is high, you will have to get a bigger amount as well.
There are some drawbacks associated with a longer repayment time as well. They include:
– Longer approval times –it will take a considerable amount of time for you to get the loan amount approved. There might be a need to offer collateral as well
– Higher borrowing costs – The overall borrowing the cost associated with a longer repayment time is high. That’s because you are spending a lot of money on the interest.
Best tips for paying a loan as soon as possible
There are some tips that you can follow to settle down your loans as soon as possible. No matter what kind of a loan you have obtained, you can adhere to these tips.
– Round up all the payments
When you are making the repayments, you can round them up to the next round figure. Then you will be paying a bit extra on the loan, which can help you with reducing the repayment time.
– Look for extra methods of income
If you are a salaried employee, you should think about finding a side hustle. That’s because the side hustle will be able to provide much-needed assistance to you with settling the personal loan or any other loan faster. That’s because you are having additional money in your hands, which you got from your side hustle.
– Make bi-weekly payments
Instead of making monthly payments, you are encouraged to go ahead and make bi-weekly payments on your loan. The extra payment that you do on a monthly basis will be able to deliver assistance to you with cutting down the overall time that you spend on repayments.
Keep these tips in mind and cut down your loan repayment time effectively.