A loan of USD 10,000 – how to choose the repayment period?

Installment loans have many advantages over payday loans (in addition to being free to receive payday loans). They make it possible to take loans with lower income and lower creditworthiness, offer much higher loan amounts, and the obligation itself does not have to be repaid at once, and in monthly installments – those that the household budget allows us to. It seems, therefore, that we will easily and repay a loan of USD 10,000. Such a high amount can, however, cause problems with choosing the repayment period in such a way that the monthly installment is not too burdensome. Let’s look at what to pay special attention to.

Where can I find a loan for USD 10,000?

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It can be said that a loan of USD 10,000 is a large liability, even by the standards of loan institutions. In most cases, this is the maximum amount you can apply for. Only a few lenders go beyond this ceiling and offer USD 15,000. I am talking about ordinary loans, without certificates and for any purpose. Non-standard loans, e.g. with surety (Orange Money) or against a car may propose larger amounts, up to USD 100,000.

Loan costs – what is their optimal ceiling?

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The amount of the monthly installment – and this is the main determinant of the repayment period selection – depends not only on the loan amount, but also on the costs associated with it. They result not only from administrative, related to ongoing loan repayment services. It would seem that the more installments, the more we will pay for the loan. Yes, it will, but these costs will not increase proportionally. At some stage, the rate of cost increase will slow down and will be much lower than before, calculated per installment. What’s more, given a larger number of installments, and thus a larger cost allocator, a really long-term loan (36 and 48 months) can be more profitable and will bring a low installment. We recommend that you read the article Installment loan – what does its amount depend on?

How much can we spend monthly to pay back the loan?

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If we want to pay the lowest installment per month, we have no choice but to choose the longest possible repayment period. Another thing is how much the loan relates to our real creditworthiness. The longest repayment period will not always bring the most benefits, especially if we can easily integrate a larger loan installment into our budget.

Recommendation T of the Polish Financial Supervision Authority recognizes that the maximum installment of the loan should not be more than 50% of net earnings, if we receive a salary equal to the national average or less. However, it should be taken into account that we should not have any other financial obligations. So it’s best to take an additional security buffer for fixed monthly fees, recurring or unexpected expenses, and a little “rainy day” supply.

Responsibility above all

A cool look at your own finances will allow you to understand whether we prefer maximum insurance and a lower loan installment, at a slightly higher cost, or pay the debt back as soon as possible. The best solution will be to find a golden mean that will allow us to pay a fairly low installment, but also will not get us caught up in the commitment for a long time. It is worth calculating and seeing what is more profitable, but for the borrower, above all, common sense and caution.

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