Correct credit term

When it comes to loans, the repayment term plays a crucial role. It depends on when a debt is cleared and how high the monthly burden for it turns out.

But how is the right repayment term chosen?


If you need more money than you currently have, you can take out a loan from the bank you trust and pay it in monthly installments. This works with sufficient creditworthiness of the debtor quickly and easily. Provided the funding is well planned. A decisive factor here is the repayment term. It determines the deadline by which the money taken is to be repaid.

The longer the term for the loan, the more expensive it will be

In Germany, terms between one year and a maximum of ten years are customary. An exception are real estate loans that can run for up to 30 years. How long the repayment takes is not only a question of time, but also of interest. Basically, the rule of thumb applies:

The faster a loan is settled, the lower the interest charge will be and the cheaper it will be for the borrower. The monthly loan installments are higher. Behind the lower interest rates for shorter maturities lies the logic of credit institutions that the default probability of a loan increases with its maturity.

Anyone who repays their debts over ten years may, in the course of time, become more illiquid due to unemployment or sickness than someone who only needs two years to repay. Higher interest rates are due for the rising risk.

Calculate loan rates realistically

Therefore, the repayment term should be well planned. For this, you have to assess your own solvency in a predictive and realistic manner. This includes the future development of income, rent and other fixed costs such as electricity and water, the car and of course food. Not to forget spending on holidays and other leisure activities.

The amounts should not be too tight, but generous, so that a financial margin is available. Also not to be forgotten are our own reserves, which can be included in the credit. In the end, there must be a value that you as a borrower can afford monthly without much effort.

Calculate credit term – easily online


Of course, the credit rates should not overwhelm you. But basically a higher rate is the better choice. For those who spend more each month, their debts are faster and cheaper going on. Good Finance offers to help the loan calculator to order the repayment term for an online loan to calculate. This allows you to compare different terms and thus find the right one. Without obligation.

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Kelly Choos

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