The payday loan is a particularly flexible financing solution which makes it possible to finance projects with ease. But is it possible to take advantage of this flexibility and simplicity for projects requiring long-term funding?
How does the payday loan work in terms of duration?
Personal consumer credit, the payday loan allows a maximum borrowing amount of 75,000 dollars with a repayment duration staggered between 3 months and 7 years. Generally, a payday loan makes it possible to finance projects, whether it be goods (a vehicle, a television, etc.) or services (a trip, accommodation costs for student children, etc.).
Obviously, the longer the repayment period, the higher the cost of credit. This is so due to the risk taking suffered by the credit agency. It is therefore recommended to choose as far as possible a relatively short repayment period if one wants to avoid a high cost of credit.
Choose the optimal duration of the payday loan
Obviously, the borrower does not decide for himself the duration of the repayment. This decision is made in consultation with the lender, who will have the final say on the matter. Concretely, the repayment period will depend on various elements such as the repayment and debt capacity, or the will of the establishment. It should be noted that in exceptional cases such as the financing of work in the house, the lending establishment may, under certain conditions, extend the repayment period up to 120 months.
However, in general, lending institutions offer repayment conditions determined according to the desired project. For example, the repayment period will generally be less than 48 months for the financing of a used vehicle, and may reach 72 months for the financing of a new vehicle. This same duration is often recommended for the purchase of furniture or computer devices or household appliances.
The need to be well informed before committing to a payday loan
Be that as it may, the use of a payday loan implies being able to ensure repayment within the time limits stipulated in the contract. The right balance needs to be struck between current and future debt levels.
It will be understood, a rapid repayment period has the advantage of reducing the cost of credit, but involves a significant financial effort in the short term. Conversely, a long-term repayment reduces the monthly amount of monthly payments, but has a high financial cost.