Are you planning to finance loan for 84 months? The timing is well chosen because cheap key interest rates reduce the interest burden for long-term loans. Nevertheless, low interest rates do not only invite you to purchase expensive goods. They also offer the opportunity to finance safely without RSV.
We want you to get to know the full benefits of a 84 month loan. Our credit advisor presents you with options that you may not have thought of.
Loan for 84 months – long term no interest rate trap
Long-term loan interest rates have a significantly more noticeable impact on financing costs than short-term loans. A few years ago, it would not have been advisable to take out loans for 84 months. From a term of more than 72 months, a jump in interest rates made the loan more expensive. The rise in interest rates was demonstrable for every credit provider. There was a risk for debtors that their credit would become an interest rate trap.
The tide has turned since 2015. Loans are not only very cheap overall, but today (July 2016) interest rates remain constant. There is no longer a noticeable difference in interest rates between 60 months, 72 months or 84 months. This opens up additional scope for borrowers who cleverly finance in the long term. Long-term credit means more freedom for individual loan repayment.
Taking out a loan for 84 months today enables you to pay in small installments without foregoing recognizable repayment. At the same time, opportunities open up for bargain hunters. In addition to the effective annual interest rate, the loan conditions were also adjusted for many loan offers. In the meantime, there is the right to free special payments of any amount and breaks in payment with more and more long-term loan offers.
Finance long-term – make your loan secure
Modern borrowers expect from their installment loans not to be squeezed into a tight corset of punctual performance. Modern credit conditions allow special repayments or to suspend once at a rate. Borrowers can repay quickly, but still finance flexibly and securely. Secure repayment ability plays an important role, especially with long terms. Nobody can see the future.
Only officials can be certain that the job will still be safe in seven years. A loan is securely financed if there is sufficient money to pay in installments under all circumstances – including unemployment or illness. The credit rate should not have a disruptive effect on everyday money needs, even in difficult times. In the past, creating such “all-round security” was only possible by completing an RSV.
The downside of credit insurance, however, are the contributions. Around 10 percent of the loan amount (per borrower) must be factored in for insurance cover. This makes the loan significantly more expensive. With the RSV, which is usually offered as an option, the costs are not recognizable in the effective annual interest rate mentioned. You are simply saddled onto the net loan. Financing a 15,000 USD loan for 84 months would be around 1,500 USD more expensive.
Finance securely without RSV – long term, guaranteed to be solvent
To be able to suspend the offer once a year at the rate entices to sew 15,000 USD in credit on edge. Instead of paying at 3.89 percent effective interest in 84 installments at USD 203.81, the loan should be paid in 60 months. The then due 275.05 USD are difficult, but there is the installment break. An RSV creates security for a term of 60 months and increases the price to 302.55 USD per month.
It would be smarter to finance a 15,000 USD loan for 84 months. Around 100 USD could be set aside per month in a standing order. Saved without burdening the household budget, compared to the loan with 60 months term and RSV, additional burden. After 2 years, 2,400 USD are in the savings book. This money could be used to safely pay the monthly rate for 12 months in the event of unemployment or illness.
The RSV usually does not pay longer than the time of ALG 1 or sick pay. This means that the loan is almost as secure as if it were covered by insurance. – Only the death would be factually uninsured. If life goes as planned, the income allows the payment originally planned for 60 months, the savings will grow. After 54 months at the latest is payday. At this point, the savings balance reaches the amount of the remaining debt.
The savings make it possible to finance a 15,000 USD loan for 84 months as securely as 60 months with RSV. If nothing unpredictable occurs, the loan can be paid off after 4.5 years.