In redemption the debtor gives the lender (financial institution) a refund of the money granted by the latter within an agreed period and interest rate (fixed or variable) previously agreed.
Since all three elements are interrelated, contemplating a loan should be taken into account that the higher the repayment period, the more interest you pay on its debt. However, larger repayment term, lower subscription costs to be borne.
Thus, the term is determined largely by the amount of money you are willing to spend on your debt each month. Also, it considers that the repayment terms vary according to the type of interest: fixed rate operations tend to be shorter than variable rate of interest repayment.
Choose a type suitable repayment to the individual needs of each person helps to better manage resources and optimize the payment of debts. It is important to assess the possibilities and to consult a financial adviser to help decide what kind of repayment is the most convenient for you.
The most convenient type of repayment will depend on each individual case. The applicant must evaluate their past, current and expected revenues. Financial institutions suggest that the monthly payments are not higher than 40% of net income customer since otherwise the payment may be compromised.
Also, as with all future plans, to plan the most suitable type of depreciation must consider the purpose of your debt (if it is to buy a house that will last many years, a car, or other technology).