High loan installment – The best proposals to lower the installment
Before applying for a loan, make sure that the loan installment is not too high. This recommendation is addressed to consumers by banks and financial institutions through information campaigns and consumer associations. This is certainly a valuable piece of advice, but nobody explains how to figure out if the loan installment is too high, and how to possibly orientate yourself in order to lower the figure and make it more sustainable (see also Loans cheaper ). Let’s look at some useful tips.
The sustainability of the installment
To establish whether a loan installment is too high, the concept of sustainability must first be defined. When is an installment sustainable? In an absolute sense the amount of the installment must be repayable without excessive effort, considering the current expenses that must be incurred, including food, payment of bills, etc. So a loan installment is too high when, considering the overall monthly outlay, it would not be possible to pay the loan installment without facing immediate or future difficulties.
For example if you have a monthly income of 2000 USD, but you already have a total “committed” of 1800 USD, even an installment of 100 USD could be too high. On the contrary on a monthly income of 1500 USD, with current real expenses of 500 USD, an installment of 200 USD could be safely sustainable. To do this kind of calculations you can use special software like the one made available by Monitorata.
What do you need to know?
To make the necessary calculations you need to have certain data available. On the costs already in progress, we can refer to the balance of the average monthly disbursements, while for the determination of the more or less sustainable installment the first thing to do is to ask for a quote, or rather more estimates that take inspiration from more alternatives (amounts and different durations).
Even if comparators are used, the advice is to go and ask for various personalized estimates, remembering that they do not generate any type of commitment (see also Loan simulation ). Not only in the case of online requests can certain data be obtained in a few minutes that will simply be saved if they arouse interest or bypassed if they are not considered evaluable.
How to lower the installments if they are too high?
In order to lower the rates that seem excessively high, in some cases it must be decided upstream while in others even later. This second possibility is offered by some flexible products (such as the ‘jump installment’ and ‘installment change’ by Astro Finance or Bankate ), by the so-called ‘debt consolidation’ or by a replacement of the loan already in progress. It is clear that when possible it is better to always choose financing with flexibility.
If you are still in the evaluation stages, to lower the rate too high you must extend the duration even at the cost of paying a little more interest. Thinking of starting with a high loan installment and adjusting it in the future, without a clear plan, is in fact a big risk.