What some people perhaps don’t know is that long-term personal loans do indeed exist, and for well-qualified applicants, the terms can be very attractive. And even for people with bad credit, long-term loans with guaranteed approval can still be a reality. If this is all news to you, here’s a closer look at long-term loans and how they work.
Pros and Cons of Long Term Loans
So you’re curious about long-term loans. The truth is, they’re not too much different from their traditional short-term counterparts. Long-term loans generally have repayment terms that span from three to 10 years, giving you plenty of time to pay back what you borrow. But it’s not all upsides with long-term loans. Here’s a look at a more complete list of pros and cons.
Pros of Long-Term Loans
- Manageable payments. The longer your loan term is, the smaller your payments will be, making it easier to maintain a sound budget.
- Finance large expenses. With a long-term personal loan, you could easily finance large purchases including motorcycles, boats, and cars.
- Boost your credit score. As long as you make your payments on time, a long-term loan can have a dramatic, positive impact on your credit score.
- Debt consolidation. By leveraging a personal loan to consolidate debt, you could stand to save a huge amount of interest.
- Work the system. By taking an aggressive approach to repayment, you could capitalize on the terms of a long-term loan and save money in the long run.
Cons of Long-Term Loans
- Increased interest. Lower monthly payments mean a higher balance over a longer period of time, increasing the likelihood that you’ll end up paying a ton of unnecessary interest.
- More time in debt. It almost goes without saying, but long-term loans also mean long-term debt, so it could be a while until you’re back in the black.
- No wiggle room. With the majority of long-term loans, the specific terms are fixed, and if you miss a payment or two, your credit score is going to suffer.
What is long term financing?
On a personal level, we may all have a different definition of what we consider long term. However, in the finance world, a long term loan is usually considered a loan with a term exceeding five years. If you are looking for a long term personal loan, PrimeRates can help. PrimeRates has top lending partners that can provide some of the best long term personal loans for all credit types. Long term personal loans can provide more affordable monthly payments. However, borrowers should consider that longer loan terms usually mean higher overall loan costs. If you can afford the monthly payment comfortably for a shorter term loan, it may be a smarter financial decision. When you borrow money, it’s important to make sure you can cover the monthly payment. If you need a longer loan term to ensure the monthly payment is affordable, by all means you should use the longer term. Most personal loans do not have an early payoff penalty. This means you can pay the loan off early without being charged extra fees and save money on interest. You should keep this in mind if you go with a longer term. If you get extra cash you can put it toward your loan balance to help pay it off faster, thus reducing the loan cost.
What are examples of long term personal loans?
Some lenders offer personal loans with terms up to 12 years. Most lenders have a minimum term of 2 years for personal loans. Anything within the 2 to 12 year range could be considered long term. However, most financial professionals do not classify personal loans with terms less than 5 years as long term. An example of a long term personal loan could be a personal loan used for home improvements such as a kitchen remodel or swimming pool. Most home improvement projects require a decent investment. If you do not have the cash available you may need to use a long term loan.
What is the longest term for a personal loan?
The longest term available usually depends on the lender you are working with. In most cases, 12 years is the longest term offered for a personal loan. Available terms usually depend on the amount of money you borrow. Usually, the more money you borrow the longer term a lender may offer. Most lenders provide basic information online such as loan amounts and terms available. If you need more than 12 years to repay a loan, you may want to consider a secured loan such as a home equity loan or HELOC loan. Homeowners can obtain a secured loan with terms up to 30 years. However, to qualify for a secured loan you usually need equity in your home and excellent credit.Â
What is the difference between long term and short term personal loans?
There really is not a difference between a long term and short term personal loan besides the fact that they have different repayment terms and loan amounts. Regardless of the loan term or loan amount for a personal loan, they are usually issued as a lump sum of cash that can be repaid over a certain term with interest. If you borrow $5,000 you most likely will not be offered a long term loan. However if you borrow $50,000 you should be offered a long term loan. Lenders understand that the more you borrow, the longer you may need to repay the loan. Offering flexible terms creates more affordable monthly payments, thus benefiting both the borrower and the lender. Longer terms mean more interest charges for lenders. More affordable monthly payments mean less financial stress for borrowers and an increased chance of on time loan payment for lenders.Â
When should you consider a long term personal loan
There are many reasons you may consider a long term personal loan. Some of the most common reasons for using long term personal loans include home improvements, debt consolidation, emergency expenses, wedding financing, and more. As we mentioned earlier, a longer term can mean more interest charges. However, if you are using the personal loan to improve your home, pay off higher interest debt, or other positive reasons a long term personal loan can be easy to justify. Most lenders offer terms five years or longer for loans $50,000 and up. If you are looking for an easy and secure way to compare personal loan offers, you should apply at PrimeRates. PrimeRates allows individuals to view personal loan offers based on your borrowing needs and credit score. Keep reading to find out how to apply.Â
Long-Term Personal Loan Lenders - 72, 84 or 144 Month Loans
A variety of lenders offer long-term personal loans. Here’s a look at two of the best ones:
Lightstream: If you’ve got excellent credit, it will be tough to find a better lender than Lightstream when it comes to long-term loans. A division of SunTrust Bank, Lightstream offers some of the most attractive terms in the industry. Borrowers can apply for loans ranging from $5,000 to $100,000 with interest rates as low as 3.34% for auto loans and 4.99% for home improvement projects. This makes Lightstream an outstanding alternative to traditional home-equity loans. Lightstream can also approve your application instantly and deposit funds into your account as quickly as the same day.
SoFi: Offering long-term personal loans from $5,000 to $100,000 and ranging from three to seven years, SoFi is among the best lenders in the business. Fixed interest rates range from 6.99% to 15.49% for applicants enrolled in autopay, while SoFi’s variable rates span from 6.40% to 12.70%. Also, SoFi never charges origination fees or prepayment penalties, which sets this lender apart from most competing institutions.
Long-Term vs Short-Term Loans
If you’re wondering how long-term loans stack up against their short-term counterparts, the truth is that the shorter the duration of a loan, the less interest you’ll pay in the end. So while your repayment amounts might be smaller on a month-to-month basis, with long-term loans, it’s no question that in the long run, they’ll cost you more money.
» MORE: Short Term Loans
Why a Long-Term Personal Loan?
While it’s obvious why long-term personal loans make sense for people who need to access to more money than they currently have on hand, there’s another reason to apply for such a loan, even if you don’t need the funds.
Individuals with a less-than-spotless credit history can leverage long-term loans online to improve their credit scores. Long-term personal loans for bad credit give people an easy way to make up for past mistakes. But, at the same time, you need to be responsible enough to repay the funds on time, and you need the willpower to refrain from using the money for something else.
How to apply
While most banks and credit unions offer personal loans, online lenders are gaining popularity for a long list of reasons. One of the top reasons is that you can get pre qualified without affecting your credit score when you use PrimeRates. PrimeRates can connect borrowers to reputable online lenders that offer personal loans up to $100,000. When you apply with most banks and credit unions they pull your credit before pre approving a borrower. In addition, banks and credit unions usually have longer and more strict approval and disbursement processes. Some PrimeRates lending partners can fund loans the same day. Here are 3 easy steps to apply with PrimeRates. . .
#1. Visit PrimeRates and complete an application
#2. Receive multiple personalized long term personal loan offers
#3. Select an offer and get funds quickly
Conclusion
Long-term loans can serve as the ideal solution for individuals who need to get their hands on some serious cash without the worry of having to pay it back within one or two years. If you think a long-term loan might be right for you, explore our featured lenders and choose the one that best meets your needs.
