Are you interested in long-term personal loans? The name says it all. This is a personal loan with a longer-than-usual repayment period. Although there are benefits of this loan product, you also want to be aware of the potential downfalls.
With long-term personal loans becoming more and more common, this is something you may want to consider in the future – if you are in need of money.
First things first, you can apply for long-term personal loans from both private lenders as well as banks and credit unions. Consider both options to ensure that you make the right decision.
Benefits of Long-Term Personal Loans
- A longer repayment period means a smaller monthly payment. Are you looking to borrow a lot of money but pay it back in small amounts every month? If so, you want to get the longest term possible.
- Lower interest rate. Since you are paying the money back over an extended period of time, you can expect a lower rate – as long as you have a good credit score and history.
- Availability. As noted above, private lenders, as well as banks and some credit unions, offer these loans. This allows you to find the one that is perfect for you.
Potential Drawbacks
Wouldn’t it be nice if everything about long-term personal loans was a benefit? Unfortunately, this is not how the lending industry works.
- Pay more in the long run. Since you are opting for a longer repayment period you end up paying more in interest.
- Better chance that something bad could happen to your finances during the repayment term. This could be anything from a job loss to a medical emergency. If your financial situation changes, you may be unable to make your payment. In turn, your collateral could be at risk (if it is a secured loan).
Before you opt for a long-term personal loan, compare the pros and cons above against other options – such as a short-term loan.
Note: not every lender offers the exact same terms on a long-term personal loan. Details such as interest rate and repayment period can and will differ.
With long-term personal loans, you have an extended period of time to pay back the borrowed money. Along with this, you have the right to use the funds for how you see fit.
Thanks to a long list of benefits, long-term personal loans have become extremely common.
