The typical repayment period for a short term installment loan is 1 – 5 years. The interest rate that you are charged will determine how much you are expected to pay back every month. The interest rate in a longer loan term will be higher even though the monthly payment is low. If you can pay more every month for the loan, you should choose a shorter loan term as this will help you save money on the interest fee in the long run.
The interest rate can be a fixed rate where the interest rate is locked so that you pay the same interest rate throughout the entire loan term. It can also be a variable rate where the interest fee you pay will depend on its fluctuation in the loan term. There are also two types of short term installment loans including secured and unsecured loans. Unsecured loans is better because you don’t have to use your property as a security deposit. In secured loans, the lender has the right to auction off your property in case you are several months behind in making repayment for your loan.
You will be debt free faster when you choose a shorter loan term. There is always the possibility that you want to repay the loan in full before the end of the loan term. Therefore, it is best to look for a personal loan that does not charge any prepayment penalty fee. Prepayment penalty fee is a type of fee that the creditor charges onto the borrower who want to repay the loan early.
When choosing a loan term, you must ask yourself how many years do you need to take to repay your loan. You should also ask yourself how frequently you want to make the repayment. Many creditors allow the borrowers to choose the repayment date. You can choose the repayment date to be weekly or monthly. It is important that you know all the fees and charges that you are supposed to pay for borrowing the loan.
Most creditors offers personal loans with a loan amount that range from $1,000 – $35,000. Some creditors offers personal loans as much as $50,000. You should only borrow the amount you need for covering your expenses. The financial institution site may have a borrowing calculator that you can use to calculate your expenses of borrowing a certain loan amount.
You will be required to put down your signature on a credit contract that states the loan amount and loan term. It is important that you go through the credit contract and completely understand your duty as a borrower before putting down the signature. Before applying a loan, you must make sure that you can set aside the sum of money required to repay the loan every month.