pay off a personal loan

Repaying a loan: reducing capital or time?

Asking for a loan is fortunately very normalized. The ease with which financial institutions provide credit lines makes it a comfortable and highly configurable process according to our needs. When paying off a loan partially or advancing a part of the capital used, is it better to reduce capital or time? In this article we solve the doubts about it.

What you should know about a loan

The good performance of the Nigerian economy has been encouraging financial institutions to provide liquidity to their clients. Often times it is even difficult to resist offers from finance companies. And it is that having an extra that we can amortize in a short time is always tempting.

There is still some suspicion about personal loans , although they are appropriate products at specific times. The improvement of online banking makes possible both its contracting and early repayment.

Repaying a loan, does it cost money?

Yes, repaying a loan has an economic cost for whoever has hired it. But do not be alarmed, the price to pay is not too high. The amortization price can never be greater than 1 percent if we have more than one year to complete it. Neither more than 0.5 percent if less than that time remains.

For example, if we have subscribed a loan of which 2300 euros remain to be paid, the total cancellation would have a cost of 23 euros; in the event that more than one year remains. And if we have less than 12 months left, 11.50 euros must be paid.

What to do? Amortize capital or terms?

If you are lucky enough to have saved some money and decide to repay part of that loan, what is the best option? You have the possibility to continue paying the same fee and reduce time, or amortize part of the capital and adjust the fee. With this you will continue to pay in the agreed time, but less amount.

When it comes to reducing the amount of a loan, it is more interesting to reduce the time than to reduce the amount of the installments. First of all, because you are going to save more interest. Each installment has its part of interest, and the less time you are paying installments, the less is the final interest.

Secondly, unless your financial situation is critical, when you sign a loan you do so with installments that you can pay comfortably. By reducing time, we return earlier to the previous financial status quo . Prolonging the payment of a loan at the cost of having more comfortable installments should not be our first option.

Get your personal loan right

The best way to make the right choice and get it right with a personal loan is to compare different options . In this way you can have more information to be able to choose well. It is important to choose the one that best suits your possibilities both in time and in reasonable installments. Never, out of desperation, go to the first one you find, there may be abusive clauses. In Ideal Loans you will always find the most up-to-date information.

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