Should loans have longer tenure just to reduce monthly repayment?

Should loans have longer tenure just to reduce monthly repayment?

Claim: Loan tenure should be increased so that it becomes more affordable, and access to financing is improved.

Claim:
Loan tenure should be increased so that it becomes more affordable, and access to financing is improved.

Fact:
Increasing the loan tenure will further add to the total cost of financing without significant improvements in the affordability of one’s monthly instalment.

For example:

  Loan tenure of 35 years Loan tenure of 40 years Difference
Loan amount (RM) 60,000 60,000  
Financing rate (%) 4.65 4.65  
Monthly instalment (RM) 289.55 275.55 14.00
Total cost of financing (RM) 121,612.35 132,264.03 10,651.68
Difference in total cost     8.8%

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