When you want to apply for a loan, there are several things you need to take into account, one of which is the loan tenor. The loan tenor is divided into two, namely short tenor and long tenor.
The tenor is very important to consider because the existence of this tenor affects our ability as debtors to pay installments and pay off loans according to the agreed time.
Although short tenors and long tenors both have their advantages, there is nothing wrong if considering choosing a long tenor loan. We can see the complete information regarding long tenor loans through the explanation below.
What is a Long Tenor Loan?
The tenor is the loan repayment period. Each financing company or bank has various tenors and agreements between creditors and debtors.
So, what is meant by a long tenor loan is a loan repayment period with a long loan repayment duration. Generally more than 12 months.
Advantages of Long Tenor Loans
As your consideration for choosing a long tenor, here are the advantages of a long tenor loan.
1. Have a Smaller Installment Amount Each Month
The choice of a long tenor has an effect on the number of installments that must be paid each month. With a long tenor, you can have smaller installments each month.
Long tenor loans are usually provided by financial institutions that offer loans with collateral or collateral. As for online loans, the tenors offered usually start from 1-12 months.
2. Easier to Manage Debt or Other Installments
With a long tenor loan, you can more easily manage debt or other installments because the fees are not too large. So, it is easier for you to manage your finances and divide them into several posts.
3. Avoiding Bad Credit
Small monthly principal installments and a long tenor make this type of loan suitable for you to choose from, especially if you have a monthly income that is not too high. That way every month you will avoid bad credit.
Disadvantages of Long Tenor Loans
Meskipun pinjaman tenor panjang memiliki sederet keuntungan, tenor jenis ini juga punya beberapa kekurangan yang perlu Anda ketahui. Antara lain yaitu:
1. The number of interest rates offered is increasing
Without you knowing it, if you take a long tenor loan, then during the loan period, you will of course also have to pay the calculated interest.
In other words, you need to pay interest for a long period of time and in total, the amount of interest is quite high when compared to short tenor loans.
However, this will not be a problem if you are able to pay the installments on time every month.
2. Risk of Paying Fines
The longer the term of your loan, the more risk you have to fail or be late in paying the installments. This is what makes the fine will continue to run. Therefore, make sure to always pay the installments on time to avoid penalties that have been calculated at the beginning of the loan.
Image Source: Unsplash/Gabrielle Henderson
Long Tenor Calculation Simulation
To make it easier for you to understand long tenor loans, let's look at the simulation of calculating the tenor period below.
For example, you want to apply for a loan with a loan ceiling of Rp. 150 million. So an example of the calculation is as follows.
Loan Ceiling = Rp150 million
Tenor = 60 Months
Total Monthly Principal Installments = Loan Ceiling : Tenor Period, so 150 million : 60 Months = IDR 2.5 million
Interest Rate= 7%/Year
Amount of Interest to be Paid = Loan Ceiling X 7% : 12 = Rp.875 thousand
Monthly Installment to be Paid = Principal Installment + Interest, then IDR 2.5 million + IDR 875 thousand = IDR 3,375,000
The total amount of the loan that needs to be paid = IDR 3,375,000 (Monthly Principal Installment) X 60 (Tenor Period) = IDR 202,500,000
After you see the simulation above, of course, it is enough to imagine in your mind if a long-tenor loan has a fairly large interest. However, this will not be a problem if you can pay your installments on time every month. In addition, the existence of this long tenor can keep your monthly cash flow healthy.
The Basic Difference Between Long Tenor and Short Tenor Loans
There are some striking differences between long and short-tenor loans. Among them are the following.
1. Different Tenor Periods
2. Interest Rates
3. Monthly Principal Installments
Things to Pay Attention to Before Applying for a Loan
Before applying for a loan, make sure you pay attention to the following things.
1. Choose the Right Product
There are various types of loan products that you can choose from with various advantages. Choose a product that suits your needs and your ability to pay in installments. This is done to minimize bad credit or even disrupt your monthly cash flow which will be very burdensome for you financially.
In this case, if you feel confused, you can first consult with the financial institution or finance company of your choice.
2. Credibility of the Financing Company
Make sure the financial institution you choose is registered and supervised by the Financial Services Authority (OJK) so that it can be ensured that it is safe and reliable. So, always make sure to choose the legal one!
On the other hand, it's a good idea to pay attention to the terms, the amount of interest set, and the tenor offered.
3. Observant in calculating the ability to pay
It is important for us to remember, that all forms of loans are obligations that we must pay by paying installments or installments on time. So, make sure you have taken into account the ability to pay before deciding to take credit.
Long Tenor Loan Services
There are many finance companies in Indonesia. The presence of these companies is in line with the increasing needs of the community.
One of the finance companies that you can choose is BFI Finance. BFI Finance is a financing institution with a guarantee in the form of a house certificate or vehicle BPKB. BFI Finance is licensed and supervised by the Financial Services Authority (OJK). So, it is certain that it is safe and reliable, yes!
If you need a fast loan for various types of needs, you can apply for it at the following link.
Submission Information Car BPKB Guarantee Loan
Disbursement of funds up to 85% of the value of the vehicle and a tenor of up to 3 years.
Submission Information BPKB Motor Guarantee Loan
Loan funds with a fast process and a maximum tenor of up to 18 months.
Submission Information Home Certificate Guarantee Loan
Low interest starts from 0.9% with a long tenor of up to 48 months.
Sobat BFI, that's information about long tenor loans. Whatever the choice, it all depends on you, if you choose to apply for a loan with a long tenor for reasons of stabilizing financial flows and do not want to have large installments, then make sure you choose a loan or financing institution that is safe.
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