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Long-Term Loans: What to Know and Where to Shop

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Long-term personal loans typically come with a repayment term of 60 months or more. This extended repayment period has both pros and cons: while borrowers may end up paying more in interest over the years, their monthly costs are usually lower with a long-term personal loan as compared to a shorter term loan of the same amount.

Let’s look at 3 loan-term loans that might serve your purpose well, and then let’s answer the following questions about the hows and whys of this kind of debt:

Long-term loans to consider

Long-term loan companies can provide borrowers with lower monthly payments than they might find elsewhere. But just because you’re paying less per month than you would with a shorter term doesn’t mean you should settle for just any loan. You’ll want to look for low or no fees, a high enough borrowing limit to meet your needs and an APR that you’re comfortable paying.

Here are two long-term loan options you may want to consider: Discover Bank and LightStream personal loans.

Long-term personal loan lenders
Discover LightStream
APR range 6.99% to 24.99% 7.99% to 24.99% *with autopay
Loan terms 36 to 84 months 24 to 144 months
Loan amount Up to $40,000 $5,000 to $100,000
Fees Late fee of $39 if payment is not received in full by the due date None
Minimum credit score requirement Not specified Not specified

What should you consider before getting a long-term personal loan?

Long-term personal loans pros and cons
Pros Cons
Can enable borrowers to finance larger expenses Requires financial stability beyond the foreseeable future
May reduce monthly payments compared to a loan with a shorter term Can be difficult for those who don’t have great credit to qualify
Can provide assistance to those who need access to funds relatively quickly Can increase your overall costs
May give borrowers a better rate compared to a credit card May limit your choice of lenders

As with any financial product, you’ll have to weigh the terms of a long-term loan and decide which option fits your finances.

One way to decide is by doing the math to see what your monthly payments would be given a certain APR, borrowing amount and repayment term. That exercise can help you determine what the longest term for a personal loan you’re both comfortable with and makes financial sense. If, for example, you figure out that you would be paying more interest over the life of the loan than you believe is worth it, you may wish to consider a shorter term.

Check the math: Short- vs. long-term loans

Consider the following example of an $11,000 personal loan with an 8% APR. As you can see in the chart below, paying this loan off over 36 months involves a higher monthly payment but significantly lower interest charges. Extending your term to 84 months would slash your monthly payment but more than double your interest costs over time.

Check the math: Short- vs. long-term loans
36 months (short-term loan) 84 months (long-term loan)
APR 8% 8%
Loan amount $11,000 $11,000
Monthly payment $344.70 $171.45
Interest owed $1,409.20 $3,401.66
Total amount repaid $12,409.20 $14,401.66

Long-term loans can make the monthly repayment process a little less painful since you’d be paying back a lower amount each month. However, over time, that adds up in the form of interest — even if you were to secure the same APR and fee schedule. In some cases, that can turn a decent loan into a considerably larger financial obligation that prevents you from doing other important things, like saving for retirement.

You’ll have to decide what you’re comfortable with before you commit. You’ll also have to consider the essential differences between short-term and long-term loans and how that applies to your financial situation. And if you do ultimately decide that long-term loans are a good option for you, be sure to shop around for competitive terms.

When does it make sense to get a long-term personal loan?

There are two main scenarios when borrowing a long-term personal loan could make sense for you:

You need to borrow a large loan

If you need to cover a large expense, such as a medical bill or home renovation, you might consider a long-term personal loan. With a long-term loan, you can often borrow a hefty amount (e.g., LightStream offers up to $100,000), and use it toward a variety of expenses.

The borrowing limit of a long-term loan is often much higher than the amount you could put on a credit card. Plus, it may have a lower interest rate, so your long-term costs of borrowing won’t be as burdensome.

You might also use the money toward debt consolidation, but be careful not to stretch out your debts even longer. Consolidation might not be worth it if you’re adding years to your repayment schedule.

You’re seeking a lower monthly payment

Long-term loans can also make sense if you’re seeking a low monthly payment. This might be a priority if you’re borrowing a large amount and need to stretch out repayment over five years or more.

Let’s say, for example, you borrow $40,000 with a 7% interest rate. Over a payment period of three years, your monthly payments would be $1,235.08. But if you can repay that sum over seven years, your monthly bills would be half that at $603.71.

Of course, opting for a long term means higher interest charges over time. So you need to weigh your comfort for a more affordable monthly payment with these extra charges.

When should you avoid a long-term personal loan?

One of the main reasons to be wary of a long-term personal loan is the interest charges you could accrue over time. The longer you take to pay off your loan, the more you’ll pay in interest.

Another downside of a long-term loan is that it will keep you in debt longer than a short-term one. If you can afford higher monthly payments, it could make sense to opt for a shorter term and get out of debt faster.

Finally, long-term personal loans can come with rigorous borrowing requirements. If you want an unsecured loan, or one that’s not backed by collateral, you may need to meet stringent credit and income requirements to qualify.

Without a strong credit score and steady income, it could be difficult to get a long-term loan, or at least to qualify for one with reasonable interest rates. If your loan offers are attached to sky-high interest rates, you might want to reconsider your options.

Where can you find long-term personal loans?

When searching for low-interest, long-term loans, consider these three main options:

  • Banks, such as Discover Bank, may offer long-term personal loans with competitive rates. Some banks offer special APR discounts or other benefits to current customers.
  • Credit unions, which often have low rates and flexible terms. You’ll likely have to become a member of a credit union to access its loans. While credit unions tend to have strong customer service, they don’t always have as advanced technology as banks or online lenders. For instance, you might not be able to do a prequalification online with a soft credit check or manage your account through a mobile app.
  • Online lenders, such as LightStream. Online lenders often let you check your rates with no impact on your credit score. They tend to offer easy online applications and fast funding for borrowers with strong credit.

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How do you get a long-term personal loan?

  1. Figure out how much money you need, and how much you can afford to pay each month toward a loan.
  2. Gather your required documents, most likely including proof of income and identity, and check your credit score to determine long-term loan eligibility.
  3. Shop around with lenders by comparing available terms and fee structures. Many lenders allow you to prequalify (which doesn’t impact credit score) to help you figure out your long-term loan eligibility and what types of terms you may qualify for.
  4. Narrow down your options, comparing long- and short-term loans to make sure you select the best option for your situation.
  5. Complete and submit your application.
  6. If approved, accept the loan and begin repayment.

Are there long-term loans for bad credit?

What it is Loan terms
Secured personal loan A loan that requires you to put down something of value as collateral Depends on the type of secured loan you get
Home equity loan A fixed-rate loan taken out of your home’s equity Typically 5 to 15 years. Can go up to 30 years
Home equity line of credit A variable-rate, open-credit opportunity, also taken out of your home’s earned equity 10 to 20 years after draw period

Secured personal loan

Secured personal loans allow borrowers to use things they own as collateral. That can lessen the necessity of stellar credit to get a lower interest rate and provide a source of long-term loans for bad credit. On the other hand, that means your collateral could be in jeopardy if, for example, you were to miss a payment. This is extremely dangerous if you plan on using your home, or another necessary asset, as collateral.

  • OneMain Financial: APRs range from 18.00% to 35.99%. Qualified applicants can take out up to $20,000 and terms from 24 to 60 months.
  • Mariner Finance: APRs range up to 36.00%. Applicants can see if they qualify for an unsecured loan or a secured loan at the same time, and those who qualify can borrow up to $25,000.

Home equity loan

A home equity loan is a loan taken out against earned equity on a home, with interest rates that are typically lower than you’d find with something like a credit card. You’ll have to have a considerable amount of equity built up to get one, however, either by paying down your mortgage or if the value of your home increases. You’re also typically capped at borrowing 85% of your established equity.

To qualify, you also should have a debt-to-income (DTI) ratio below 43%, and the lower the better. Though it will be easier to qualify if you have good credit, you may still be able to get a home equity loan with bad credit, especially if your other financial stats, like your DTI ratio, are solid.

Home equity line of credit (HELOC)

A home equity line of credit, or HELOC, gives homeowners access to about 80% to 90% of their equity to use and repay with interest. Unlike a loan, there is a specified period during which you can take out money (known as a “draw period”), followed by a repayment period, which is when you’d start paying back the loan as well as the interest. There are also associated closing costs, which are similar to the ones you paid when taking out the original mortgage.

To get a HELOC with low rates, you’ll need to have a loan-to-value ratio of about 80% and enough income to cover your usual mortgage payment as well as the new payments. A HELOC, like a home equity loan, can be an option for borrowers with less than perfect credit, provided their other financial information is solid.


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