A loan with a term of 120 months is always associated with a very high risk for the customer and for the bank. Nobody knows what will happen during this time and whether the customer will still have the same income after a few years as was the case when borrowing. For this reason, most banks only grant loans that do not exceed a term of 84 months.
Advantages of a 120 month loan
There can be many reasons why a customer is interested in taking out a 120-month loan. First and foremost, the fact that the monthly repayment rates are very low and that customers can also afford things that would otherwise exceed their financial possibilities are likely to play a role.
Disadvantages of a 120-month loan
The low monthly repayment rates are usually offset by very high interest rates. In doing so, the bank wants to hedge against the default risk, which is higher the longer the
The remaining term of the loan is. For this reason, anyone who is interested in taking out a very long-term loan should make sure that the bank grants them the right to make unscheduled repayments or to repay the loan at any time. In this way, not only the monthly charge, but also the total loan amount can be significantly reduced, which would then also entail a significantly shorter term.
There are usually no problems with a loan with a term of 10 or even 20 years if the borrower is an official or a long-term employee in the public service. Under certain conditions, an official loan would also be possible here, which is characterized in particular by the fact that not only is a loan taken out, but also a life insurance policy is taken out. During the entire term, only the monthly premiums for life insurance and loan interest are payable. Repayment is made in one sum at the end of the term. Capital life insurance is used for this. The official does not have to make any additional personal contributions.