There are instances wherein getting a loan is the most appropriate option for you in terms of your finances. It can be a mortgage that will allow you to finally acquire your dream home or purchase your first car. It can also be a personal loan with flexible payment terms that can help you consolidate and manage your debt. The latter is also known as a flexible loan in which the payment terms and options vary depending on what you can handle.
A credit line is an example of a flexible loan that can help you manage your cash flow. More often than not, there is a set limit on the amount of cash that you can borrow which is referred to as your credit limit. The amount of money that you initially borrow will be deducted from your credit limit. You have the opportunity to continuously renew your loan, until such time that you reach your credit limit. Only when it comes to this point that you will already be inhibited to make additional loans.
For a flexible loan, such as a credit line, you need to make the minimum payment on a monthly basis, which is coupled together with the interest rate. The loan experts from https://instabank.fi/joustoluotto state that the actual loan repayments for the principal amount you have borrowed will depend on your current capacity to pay. This means that you have the flexibility to pay for the loan as early as possible or make minimum payments for a couple of months until; such time that you save enough to pay for the principal amount eventually. In a gist, some options are:
Minimum monthly installments are beneficial for you if you are tight on a budget. Settling the minimum amount due each month will allow you to use your current cash flow for other necessities that need to take priority over your loan. However, a drawback of this payment option is that you also need to settle the interest due in each month, which can sum up to be a hefty amount of money. In addition to this, you also won’t be able to utilize your full credit limit since you have an existing principal amount that still needs to be settled.
Immediate Full Payment
If you have ample funds to settle your loan instantly after borrowing it, then the best payment option for you would be an immediate full payment. In this way, you no longer have to worry about the minimum amount due, as well as a significant sum of interest accumulated. The principal amount that you pay will also instantly reflect back on your credit limit.
A staggered payment simply entails payment of varying amounts per month, depending on your payment capacity. For instance, you can make a minimum payment for this month, but make extra payments on the succeeding months. There are flexible loans that accept a staggered payment, but the overall repayment of the principal amount must be made over a specified amount of time. On the other hand, there are also flexible loans that don’t require a certain time frame for you to make a complete payment. But the latter is again subjected to the condition that you make the necessary minimum payments with interest on a monthly basis.
Is a flexible loan for you?
There are a number of things you need to consider before applying for a flexible loan. Aside from ensuring that you meet the criteria to be eligible for the loan application, also check for the interest rates and ensure that it is reasonable and manageable. While you may be able to get the cash you need instantly, it may lead to excessive debt if not managed properly.
Before you consider getting a loan, reflect on your purpose to ensure that you will be able to maximize the money that you will get, and have a way to repay your dues in time. With a flexible loan, you can decide on a timeline on when you will manage to make the actual repayment of the loan principal, for as long as you pay the minimum monthly amount due, as well as the interest.
In the event that you are able to pay for a certain portion of the principal amount, you are given the opportunity to renew your loan instantly based on the amount that you have repaid, as well as your balance. But then again, it is important to have a good insight into your financial status and have the capability to settle your dues in time.