When we talk about installment loans, we are referring to loans that can be repaid in several monthly installments. However, on this page, we show both long-term and short-term loans, so the at we can choose the one that is the cheapest or the one that best suits our financing needs.
Loans that are repaid in long terms
When we decide to apply for a loan, the main aspects in which we look are the amount that we can ask for, the period in which we will be able to reimburse it and the cost that they will have. In fact, depending on the amount and the term we choose, the price we will pay for the loan will vary.
However, in this section, we will focus on the term of the credits and, specifically, on the loans that are reimbursed in the long term.
When we talk about long-term loans we refer to those that allow us to repay the capital in several monthly or annual installments, at least three or four months. Thus, these products allow us to return the capital that they have granted us in a fractional manner. This happens because, generally, long-term loans will allow us to obtain considerably high amounts of money that it is very difficult to reimburse in one or two months.
Thus, when we talk about long-term loans we refer to the following categories of credit products:
- Consumer loans: these are products marketed by both private equity lenders and conventional banks. The amounts that allow us to achieve will be around 50,000 euros, with terms of up to 10 years and an average cost that is usually around 8% APR. However, all these characteristics will always depend on the entity to which we go and on our economic profile.
- Loans between individuals: they are similar to personal loans, but their application and concession process changes. To get these products we will have to go to a virtual platform in which we will launch our application and the purpose for which we want the money, the platform will assign us a level of risk and the investors will decide if they grant us the capital or not.
- Loans with mortgage guarantee: these products are those that allow us to obtain the highest amounts of money and the most extensive repayment terms since to contact them it is necessary that we put our property as collateral. However, if we decide to apply for this type of long-term credit, it is important that we first inform ourselves about all the conditions that we will have to comply with and make sure to do so, otherwise, we risk losing our home.
These three long-term loans will allow us to return the money in comfortable monthly installments, although it will depend on the purpose for which we want the money and our financial situation to opt for, one or the other.
What if I want a short-term loan?
Previously we have reviewed what are the long-term credits, as we can rarely repay personal loans, with a mortgage or between private individuals and reimburse them in a few months by the entities that grant them a minimum term to do so, which are usually six months from your request.
However, we may not be interested in requesting that type of product. For this reason, it is interesting to clarify how short-term credits are and what advantages we can obtain when applying for them.
Short-term loans are generally called mini-credits since they have a repayment period that rarely exceeds 30 days. In this way, when we request a mini-credit we have to know that after a month we will be obliged to reimburse all the capital owed together with the generated interest.
However, if we believe that we can not reimburse the mini-loan on the date agreed with the lender, in most cases, they will allow us to request an extension. With this service, we can postpone the payment of the mini-credit for several days and at most one more month, although we must know that it includes an additional cost that we will be obliged to pay.
Long-term or short-term credits?
It depends. The choice of a long-term or short-term credit will always depend on the purpose we want to give to the money, our economic profile and the options we can use in the financial market.
Thus, if we need large amounts of money to acquire a particular good or service and, therefore, repayment terms of several months or even years, it will be more advisable to hire consumer loans or loans between individuals. If, on the other hand, we need smaller amounts of money to solve a specific inconvenience or to obtain extra liquidity in times of economic shortages and our bank does not grant it, we can resort to unsecured loans https://green-touch.org/unsecured-loans/.
Other aspects of the credits, in addition to the term
If we decide to apply for long-term loans, it is important that in addition to this factor we look at two others that are fundamental:
- The amount: it is essential that before deciding on one loan or another, we look at whether they offer the amount we need. We clarify this because it is not advisable to hire a loan that offers us lower amounts than we need. On the other hand, we must be aware that requesting a higher amount than we need will be counterproductive to our economy since more interest will be generated since the money owed is more.
- The cost: it is the second most important factor together with the term and the amount since it will determine the monthly and final price that we will end up paying for the long-term credits. To understand this, it is necessary that we look at interest, commissions and credit links.
If we take into account these two aspects and the deadline and we know how to select them in the best possible way, we can make a contract totally beneficial for us.