Installment loans granted by non-bank companies are becoming more and more popular on the Lendy market. It is a convenient solution, which is chosen by people who cannot get a loan from the bank or who choose as an alternative to payday loans, which should usually be repaid within a short period, for example 30 days. Customers are looking for solutions tailored to their capabilities. In today’s article, we’ll look at installment loans with a decreasing installment. Are such financial products available on the Lendy market? How do they differ from loans with a fixed installment?
What is the difference between a decreasing installment and an equal installment?
When comparing two different loans – with a decreasing installment and with an equal installment – one main regularity can be seen. In the case of loans with fixed installments, their amount is always the same. The situation is different when it comes to decreasing installments. Then the borrower initially pays higher installments, and over time, their amount is lower.
Calculating the installment amount for a loan with equal installments is more complicated. For this purpose, special mathematical formulas are used. In fixed installments, the principal and interest parts must be properly balanced so that the installment always has an equal amount. It can be explained more or less that at the beginning the borrower pays a higher value of interest and a lower value of capital, and finally a lower value of interest and a higher value of capital.
Loan with decreasing installment – is it profitable?
To a large extent, the profitability of a loan with a decreasing installment depends on the amount of the contract. In addition, this product does not always fit into the preferences of the potential borrower. Not everyone is able to pay higher installments at first. However, according to specialists from the financial market, in most cases decreasing installments (as well as increasing ones) are more profitable than their permanent counterparts. The advantage of such a solution is that donating smaller and smaller sums of money can be a certain relief for the household budget in the event of a worse financial situation of the household (e.g. retirement or disability pensions and the associated lower revenues to the household budget).
Undoubtedly, one of the biggest advantages of decreasing installments is that the final amount of installments can be even half as low as their initial value. Additionally, in the case of long-term loans or housing loans, this solution can protect against the negative effects of changes in interest rates. As you know, an increase in interest rates negatively affects the amount of the installment.
Searching for the best installment loan
In that case, we have to wait for the expansion of the offer of other lenders. Until now, we can only use installment loans with a fixed installment. To find the best offer, tailored to our needs, we can use the ranking of long-term loans. The list of offers of individual loan companies allows comparison of, among others, total costs, maximum and minimum loan amount and loan period. In addition, here you can find comments of people who used the offer of the given entity. The Lendy market of non-bank loans offers a wide variety of financial products, of which one will certainly be able to choose the one best suited to our needs and possibilities.