# The Importance of Planning a Loan Payment Strategy

When you decide to apply for a loan to a bank, you should first think of a loan repayment strategy, such as determining the number of installment loans to be paid and the time period that has been adjusted to your ability. You need to know, if the loan period is also very influential on the number of loan installments. If you apply for a loan with a short term of 6 months to 1 year, then the loan installments that you have to pay will be greater if compared to loans with longer terms like loans with a period of 2 to 3 years.

For example, if you apply for a loan of 12 million dollars with a period of 6 months. You must pay a loan repayment of 2 million dollars per month. Compare if you apply for a loan within a period of 2 years with the same nominal loan, you only need to pay a loan installment of 5 hundred thousand dollarss per month. Very significant is not the difference? Payment of loan installments with a short term will certainly be more burdensome for you. If you are still confused, you can try to calculate the difference in the nominal installment with a loan calculator that has many applications available on the internet page.Loan calculators available on various internet pages usually use a fixed or fixed interest system that will make it easy for you to do all kinds of calculations related to loans to banks or other financial institutions.

## The term of the loan will also affect the interest rate on the loan to be given

The longer the loan term you choose, the greater the loan interest rate you will get. Each bank has its own policy in determining the amount of loan interest rates for its customers. For example, a loan product at Bank A has a maximum loan of 200 million dollars. Loans with shorter terms have a flat or fixed loan interest rate of 1.4%, while loans with longer terms have a higher fixed loan interest rate of 1.5%. To find out exactly the amount of loan repayments, you can also calculate it with a loan calculator. From the explanation above, it can be concluded if the loan period greatly influences the size of the principal and interest installments that you must pay. Therefore you need to be more careful in choosing the loan term that suits your abilities and needs.

Apart from that you also need to consider the amount of your loan that you are going to submit. When you apply for a loan, think carefully about the nominal loan you will borrow. It’s best not to apply for loans that are too large, and adjust them to your abilities. Imagine if you cannot repay your loan, you will only get a loss due to fines given by the Bank, you can even lose all valuables that you have and no longer get trust from the Bank when you will make loans again in the future. The Bank actually will also consider the amount of loan moneyin accordance with the ability of its borrowers by further checking the conditions and background of the borrower. One way is to look at the amount of income and the amount of credit you previously had.After that the Bank will compare your income amount and credit amount.

## Planning a loan repayment strategy carefully

You can reduce the risk of things that are not desirable. You must first determine a number of important things, such as the amount of the loan you are going to propose, the term of the loan you will choose, and the amount of interest on the loan provided by the bank. Choose all the possibilities that make it easier for you as a borrower. To make it easier for you to plan a loan repayment strategy before applying to the bank, you can use a loan calculator to calculate the loan installment amount and interest rates.