A bank loan can be requested over different durations, more or less long, depending on the needs of the borrower but also on the nature of the credit, namely a consumer loan over a long period, or a mortgage.
The duration of the different credits
In France, there are two types of loans, consumer loans, and home loans. Consumer loans are capped at $ 75,000, they can be taken out for a minimum duration of 12 months and a maximum duration of 144 months (12 years).
A home loan is possible from an amount of $ 75,000, its duration can be spread over 60 months minimum (5 years) and over a maximum duration of 420 months (35 years). The duration makes it possible to define the amount of the credit maturities, the longer it will be, the lower the monthly payments will be high and vice versa, the shorter the duration and the higher the monthly payment will be.
A long term in the context of a loan allows many households to spread the debt and be able to support a new term, which is not necessarily possible with a short repayment period. It very generally adapts to the borrower’s needs but also to his debt.
Spread a loan over a long period
It is possible to take out a loan over a long period, the consumer loan will be for a maximum of 12 years, the home loan for a maximum of 35 years, 30 years for certain credit institutions.
The longer the duration, the less the credit will have an impact on the monthly budget of the household, in other words, this loan will be better integrated into the household debt, that said, an extension of duration leads to a higher cost of financing, and in particular the payment of interest.
Spreading out the duration is therefore positive in order to make a project a reality, but the latter will cost more than in the short term, a happy medium to find for the borrower.
Alternative solutions for long-term credit
The zero-rate loan is financing offered to first-time buyers who are eligible. This amount can be added to a home loan, which allows you to extend your loan capital and for some to minimize the cost. For households with consumer loans and a mortgage, a loan buy-back can finance a new cash flow project and start over a long period, thus readjusting the amount of the monthly payment.
Finally, some credits offer clauses, allowing to extend the duration of the loan, it is advisable to check in the contract if such a clause exists, thus allowing to extend the debt.