Personal loan and duration
A personal loan is a type of consumer credit. It is granted by a bank or a credit organization to carry out any type of project (purchase of equipment, works, travel, marriage, etc.).
Each bank is free to set the conditions under which it grants personal loans to borrowers. However, there is an amount and a maximum duration for this type of credit. Indeed, a personal loan can not exceed 75 000 € and can extend over a period ranging from 3 months to 5 years, even 7 years depending on the banking institutions.
What is a long-term personal loan?
Thus, we speak of long-term personal loan when the credit subscribed extends over a significant period. Generally, for a personal loan, we speak of long term beyond 2 years (48 months).
Should we opt for a long-term personal loan?
For the lender, the main advantage of a long-term personal loan is to reduce the amount of monthly payments to be repaid. Over a longer period, the amount to be repaid each month will be lower. An example to understand: if your loan is 10 000 €, you have to pay every month 833 € for a loan over 1 year, against 417 € for a loan over 2 years.
Thus, a long-term personal loan makes it possible to better integrate the monthly payments in its budget. But beware: if the monthly loan payments are lower, the total cost of the long-term personal loan is higher.
The disadvantages of a long-term personal loan
With a long-term personal loan, the lending institution takes more risks than a short-term personal loan. Because the loan is longer, the bank or credit agency has to wait longer before making any gains.
For this reason, long-term personal loans are usually granted with higher than average credit rates. Thus, with the equal borrowed amount, in spite of lower monthly payments, a long-term personal loan will be more expensive than a short-term personal loan, because interest will be higher in the first case.
Personal loan simulation to find the best duration
Choosing the right personal loan term is therefore important. It is indeed essential to find a solution that allows you to:
- Pay adequate monthly payments , which do not endanger your repayment ability. For example, if monthly payments exceed 33% of your income, you may find yourself in trouble;
- Benefit from an interesting credit rate.
To find the right compromise, the ideal is to make a personal loan simulation online! On the Internet, all you need to do is fill in the amount you want to borrow and the amount of the monthly payments you are willing to repay. The calculator tells you in return what will be the duration of the personal loan and the rate you could benefit from.
Personal loan simulation is free and without obligation. So you can make several, by varying the desired loan duration or the number of monthly payments to see which scenario is the most advantageous for you!
Note: if you can obviously study the question, the duration of the personal credit is in agreement with the lending institution. The bank or the credit institution has of course a say, especially after studying your ability to repay. If it is judged to be insufficient, you may be refused a long-term personal loan.
How to find the best long-term personal loan?
Today, banks offering personal loans are numerous. Not always easy in these conditions to see clearly on the market and to find the best offer.
Fortunately, consumer credit comparators are here to support you in your search! On Marcel.fr, you can compare personal loans in a few clicks. The best deals for your profile are in one place, so you do not have to search for information from anywhere.
Compare to get the best long term personal loan
The personal loan comparison is an easy, fast and free procedure! On all you have to do is fill in some information about yourself and your project. Based on this information, you can access a quote page in minutes, which lists the best personal loan deals for you.