Posted in Bad Loans

Are Long Term Personal Loans Ever a Good Idea?

Are Long Term Personal Loans Ever a Good Idea? Posted on October 9, 2018

 Personal loans are sometimes classified as unsecured loans; this is because they are smaller loans and are usually granted by lenders on the basis of the borrower’s income. These features have changed a bit of recent as there are several lenders now lending out secured and unsecured long-term loans. With all these features in perspective, long-term personal loan are loans whose repayment period or loan’s total tenure is quite long. Here are some of its features:

Features of Long Term Personal Loans

  • Time period

The time period of long-term personal loans is simply stated as long since there are no specified limits which define a loan to be a short-term or a long-term one. Conventionally, a loan is said to be short-term if the term period is not more than 12 months, while a loan which has a term period that is greater than 12 months is a long-term loan. Hence loans which exceed 5 to 7 years time period are said to be long-term personal loans from the viewpoint of common borrowers like you and me.

Interest Rate

One of the advantages of long-term personal loans is that it is offered at a relatively low interest. There are 3 factors that are responsible for the low-interest rate:

  • It is a secured loan that is backed by collateral.
  • It is a long-term loan and the interest payable is spread over a period of the tenure of the loan.
  • It is a loan that is underwritten and sanctioned with the help of very strict rules and guidelines.

Secured Loan Since this is a long-term loan, the principle and the amount that would be lent would be high. Again, the number of installments and the interests that is going to be charged on the loan levied over a long period of time. In order to minimize risks, most lenders demand a collateral or security.

Overall, a long-term personal loan is a great loan which has great features; it is less risky for the borrower and the lender.

How to Get Long Term Personal Loans

Securing a long-term personal loan is sometimes difficult; this is because of the strict requirements and conditions of the loan that are demanded by the lender. When you apply for a loan, there are certain details that the lenders will go through in order to determine if you are eligible for the loan. They are as follows:

Credit Report

Since this is a long-term personal loan with several installments, lenders usually demand a tough credit rating and history. In order to secure this loan, you need a credit score of at 600 to get a decent personal loan.


Depending on the size of the loan, securities such as real estate or automobile is also assessed and the market value of such assets is computed.


Income is the most important factor that a lender considers, especially a borrower’s monthly income and debts payable every month. The term period, installment, and interest of the long-term personal loan are usually set in a way that the borrower is able to afford to pay back the loan.

As a borrower, it is important to apply for a long-term personal loan when you have an improved credit score as you will attract a lower interest rate. Again, make it a point to point to approach banks and other lending institutions so as to get low-cost personal loans with excellent terms and conditions.