A long-term personal loan can help you manage unexpected expenses, such as ongoing medical bills or helping to fund a group of home renovations. These loans generally have longer repayment terms than standard personal loans and might be useful for your financial goals.
Let’s examine long-term personal loans in more detail. We’ll compare their advantages and disadvantages, then identify the details that can help you determine whether or not a long-term personal loan is the right option for you.
Personal loans are flexible and can be used for various reasons. Because standard personal loans are typically used for limited or short-term expenses, they usually have short to moderate repayment terms between two to seven years.
Long-term personal loans function like personal loans, though they have longer repayment terms that may range from five to more than 10 years. Because the repayment terms are longer, you may pay a smaller monthly payment compared to the same loan amount with a shorter repayment term. But you’ll likely pay more money in interest.
Although each lender may have specific eligibility requirements to take out loans, many will generally consider the following:
Long-term personal loans are available from a variety of lenders. These lenders can be at physical locations, like banks and credit unions, orthrough online lending services.
Banks offer a traditional way to get a long-term personal loan: You can meet with a representative in person, discuss your options, and get more potential to qualify through your relationship with the bank. One drawback is that banks set their own requirements for lending and might require good credit standing to qualify.
Credit unions are similar to banks in the regard that you can visit a branch in person to apply for a loan. While you might not need to be a member of a credit union to apply for a loan through them, you’ll likely need to become a member to accept your loan.
One drawback to using an online lender is that they don’t have a physical branch you can visit. Additionally, their history in the loan marketplace might be limited. They also might only approve a loan based on creditworthiness; your status as a previous customer might not influence your acceptance potential.
Online lenders, however, tend to streamline the application process. You can apply and get accepted for a loan from home. Some lenders also specialize in lending to borrowers with low or no credit history.
Another benefit of online lenders is that it’s often easier to compare multiple lenders at the same time. Resources, such as websites that assess personal loan lenders, can help you quickly identify which lender fits your financial needs.
Related: Learn more about getting a personal loan on Credible.com
There are many ways that you can benefit from taking out a long-term personal loan, including advantages like:
Taking out a long-term personal loan isn’t the right option for everyone. Consider these drawbacks before making your decision.
| Keep in mind: Other alternatives are available. Depending on your needs, you may be able to finance your planned expenses through another option like a credit card or personal line of credit. These alternatives have their own pros and cons that might align better with your needs. |
Because each lender has their own processes for qualifying, approving, and distributing loans, you’ll want to compare the following to find the right lender for your financial needs:
A long-term personal loan might be the right option for you if you’re encountering one or all the following:
Another alternative might be a better option than a long-term personal loan in these situations:
Yes, even borrowers with bad or limited credit histories can secure a long-term personal loan. But it’s important to remember that borrowers with good-to-excellent credit histories will usually get the best rates, terms, and acceptance rates.
There are multiple long-term personal loan options for borrowers with bad credit. Some lenders have no or low minimum credit scores to accommodate these borrowers. Others will allow a borrower to add a cosigner with a higher credit score to the loan. While many personal loans are unsecured, opting for a secured loan might improve the likelihood that a borrower with bad credit gets approved.
Related: Learn more about getting a personal loan on Credible.com