If you have limited financial resources, you will opt for a long term with a loan, regardless of the amount of the loan. A small example shows that a loan with a long term can already be selected for an amount of USD 2,500 if the bank agrees. Everyone benefits from this new regulation, which was previously only intended for civil servants.
Significant relief for the borrower
A long-term loan is a significant financial relief for the borrower. However, this should be chosen carefully, because a long term also means more interest. But every household is happy to accept that if the bottom line is more money to live on. In addition, the borrower is on the safe side because low installments can be paid rather than excessive amounts.
Let us assume that an amount of USD 50,000 is to be financed. With a term of seven years with corresponding interest, the borrower would have to pay around USD 700 per month. However, if a term of at least ten years is chosen, the monthly amount is reduced to around 520 USD. With a low salary, that can make a big difference. The fact that this also increases interest rates is probably the lesser evil.
In the past, the situation was different for official loans. Due to their profession, they could benefit from long terms. The risk of credit default among civil servants or civil servants is extremely low. Therefore, it was no problem for the banks to make special agreements. Nothing has changed to this day.
Use a loan calculator anyway
Anyone interested in a long-term loan should definitely compare the offers. Interest is particularly important for long terms, because it has to be paid longer. It is therefore an advantage to find a bank that does not charge too much interest