When you obtain a personal loan, you may be given the option to pay off your loan over a few possible timelines. With this in mind, you can pay everything off in as short as a couple of months or choose to spread your payments out for a decade.
If you might feel that your current financial position does not allow you to pay off a personal loan in a matter of months, then opting for longer repayment terms may be the best way to do it. Read on to learn the major benefits that come with having longer repayment terms on personal or any other easy loans in Singapore;
1. More flexibility
A common misconception that many people have about loans with long repayment terms: they think they will need to wait for the entire payment timeline to finish before they can get their loans fully paid. However, just because you opt for long repayment terms on your personal loan does not necessarily mean you should take the entire amount of time to pay off your loan.
Even with an extended payment timeline, you can still make extra payments whenever you have some spare cash. This technique will provide you with many of the same benefits that come with a shorter-term loan, but this time, you would not be obliged to give higher payments in months when you do not have extra money. That said, knowing if your loan has a prepayment penalty would be best before providing an advance payment.
2. Lower monthly payments
The formula here is actually simple – the longer it takes to repay your loan, the lower your monthly payments will be. For instance, if you obtain a personal loan of $10,000 at an interest rate of 10%, and your payment timeline is three years, you will have to pay about $323 monthly on your loan.
Now, suppose you opt for longer repayment terms on your personal loan. In that case, say your payment timeline is eight years instead of three years – your monthly payments will be just $152. This ultimately reduces your monthly loan payments by $171. As such, this is an excellent example of how longer loan repayment terms can keep your monthly payments to a minimum.
3. More extra cash for other things
Since your monthly payments become lower with longer repayment terms, this essentially allows you to have more room for extra expenses in your budget. You may need this spare cash to pay other essential obligations, such as a payday loan, credit card debt, or other unsecured debt. You can also use the extra money to start investing or buying the things you need for the month.
There are various advantages that come with choosing longer repayment terms on your personal loans. Thus, it would be good to carefully consider these benefits when deciding what payment timeline to have on your loans. If you do not have a ton of extra cash and have other urgent financial needs to attend to, long-term loans are definitely ideal for you. Nonetheless, no matter what payment timeline you go for, it is highly recommended to pay off all your loans on time, so you can improve your credit score and obtain fast loan approval in Singapore the next time you obtain another loan.
For professional assistance and guidance on your loans, Orange Credit is here for you! As a professional and reliable Geylang money lender, we offer various easy and flexible loans that match your capacity to pay. Contact us today to learn more about our services.