news-single-imgcaption" style="width:650px">Borrowers need to consider numerous factors when calculating their loan installments. Image: stock.adobe
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From: PD
26. November 2020
FINANCIAL ADVICE Anyone who takes out a loan must think about how it should be repaid. When calculating the installment amount, the APR and the term play an important role.
In general, the following applies: The monthly rate is always made up of repayment and interest. Because a loan is not just about paying back the money you borrowed, but also about paying off the interest. When planning the monthly rate, it must always be clarified how much of it should be repayment and how much interest. It depends on how high the monthly burden is for the borrower.
Take into account the APR
The APR is one of the most important factors when taking out a loan, as this also includes special fees and Ä. are included. It is advisable for borrowers to negotiate the lowest possible interest rates so that the loan remains as cheap as possible.
How high the respective interest rate is depends on the chosen credit institution. Therefore, it is important for borrowers to conduct an independent loan comparison. One professional loan calculator is an enormous help in this regard.
It all depends on the running time
Another important selection criterion when taking out a loan is the term. Basically, a short term is always better. This is because the longer the term increases, more interest is to be paid. Therefore, it does not make sense to negotiate the lowest possible monthly payments. This allows companies to remain flexible and only have to plan a little money per month for repayment, but the loan is significantly more expensive.
Payment protection insurance
High loans in particular often run for many years or even decades. It is not always possible for borrowers to plan precisely what will happen during this time. That’s why many choose to have one Payment protection insurance complete. This takes effect in a certain insured event and pays the remaining debt that still exists for a certain loan. There are monthly fees for residual debt insurance included in the loan installment Need to become.
The fixed interest rate
Last but not least, borrowers should consider which fixed interest rate is important to them. If a bank particularly favorable interest rates offers, it is advantageous if these are agreed over a long period of time. On the other hand, if borrowers expect interest rates to fall in the near future, the fixed interest rate should only be chosen for a short time.
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