How Long Should We Take to Pay Loans and Accounts?
We should not still be making payments on a purchase or a loan after we have ceased to benefit from it. There is no fixed rule to follow and no one can determine for another how long he should take to pay for a purchase. It is important to consider:
- What monthly payments will fit into the family budget?
- How long will the product or service purchased last?
- How long will you remain interested in the product?
- How long will your income remain steady or increase?
- The shorter the term of payments the less finance charges.
Contract limits normally are longer as the size of the purchase or loan increases. Contracts for furniture can range from 12 to 24 months while auto contracts can range from 48 to 60 months.
Market Conditions That Affect Terms We Are Offered
The merchant or lender is limited by market conditions when he considers what terms he can extend safely and intelligently. In our “free economy” there are in the background governing factors that influence quite a bit the amount of funds available for consumer credit use. The Federal Reserve System sets rates at which bankers themselves can borrow funds.
The banks in turn then set the rates of interest at which merchants and the lenders of smaller amounts can get the funds they need. The banking system in this way makes it easier or more difficult, cheaper or more costly for businesses and consumers to borrow.