Extending the loan term, here’s how to reduce installments that are too high

Credit life is one of the basic elements of a loan. To avoid difficulties in repaying immediately, you need to choose how long to return the borrowed amount, so that monthly payments are easier to pay. The duration indicates the time of repayment of the loan.

Those who want a credit with low installments can choose the level based on the duration of the loan. In this way, a loan with a longer repayment period allows you to keep the installments lower.

Thanks to a longer repayment period you can reduce your monthly outlay. On the other hand, the overall financing costs will also increase, albeit in the presence of single monthly installments of a lower level.


How high can my loan amount?

How high can my loan amount?

Compile a list of your household expenses, including both income and expenses in the account. Together with the salary we must then consider other sources of income, such as family allowances or annuities. In terms of expenses, the rent, ancillary costs, insurance and a lump sum must be considered, among others, to deal with unexpected events.

The maximum limit for repaying a loan is 120 months. Installments of this type have the advantage of minimizing the monthly cost of repayment. However, a period of 120 months is considered by most people to be difficult to manage, given that over time the possibility of unexpected events increases. An extension of the repayment period, aimed only at the reduction of the monthly disbursement, inevitably leads to an increase in the overall financial cost.

Long repayment periods have the advantage of keeping the monthly installmentsproportionally low, allowing you to repay the installments regularly and comfortably. The disadvantage is that the more time you plan for repayment, the more your overall costs increase: if you opt for a 60-month term, for example, you save a considerable sum compared to a ten-year loan. You can instead choose a limited duration only if you are sure you can repay the monthly payment without problems.


Consumer credit

Consumer credit

For loans aimed at the purchase of a modern TV, computer or new furniture, it is advisable to take out a credit with a maximum duration of 12 months. The interest rate corresponds to the duration, which is positively influenced by the short repayment period. With short durations it is possible to calculate the possible market fluctuations, and how much you earn with convenient interest rates.


The long-term loan

long-term loan

Long-term loans are common in real estate mortgages. In these cases, the amount is usually very high, making it necessary to take out a mortgage of 120 months, if not 180. It is therefore not surprising that completely different rules apply to real estate mortgages with respect to consumer credit. Interest, for example, can be insured based on the interest of a fixed period. The greater the demand for credit, the more normally the loan term extends.


Conclusions regarding the duration of the credit

Find out in advance how much you can spend monthly. Be careful not to calculate a too narrow threshold, finding yourself with monthly installments that exceed your availability!

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