Choose the Longest Available Repayment Term for Installment Loans

Unsecured installment loans have a steep rate of interest. It is usually around three hundred percent per annum. The rate may easily be up to four hundred percent. There are private lenders charging over four hundred percent. Such an enormous rate of interest has a rippling effect on the total debt. Borrowing two hundred and fifty pounds can end up as more than five hundred pounds as debt after factoring in the interest. This often leads some applicants to opt for a shorter repayment term. The common perception is that a reduced or a shorter repayment term will lead to much less interest and hence the total debt will be more manageable.

There is a flipside to this common perception. Opting for a shorter repayment term means the installment shall be much higher. Repaying five hundred pounds in three months is harder than repaying six or seven hundred in six months. The priority should be to focus on affordability. Anyone who opts for unsecured installment loans is already in a financial crisis. There is no other reason to borrow money with hefty interest. Whether or not the financial crisis is expected to be resolved anytime soon, it is always wise to keep the monthly commitments or liabilities down to the minimum. The longest repayment term shall have the least monthly installment.

The stress of squeezing out a substantial sum of money every month can be unbearable for many. If the monthly installment is easy to arrange then the whole process of repayment becomes much more humane. It is true that a longer repayment term will effectively mean a much higher accumulated interest. But it is better to be able to repay installment loans with ease and surety. Defaulting is never a pleasant experience. There are steep charges for that too.