Sometimes a typical short term personal loan isn’t enough to cover your expenses, or you may want to pay smaller instalments on your loan. A long term loan helps you spread your expense into affordable monthly instalments over an extended term – usually from 7 to 10 years.
Read on to find out how to apply for a 10-year loan.
What are long term loans?
Long term loans are essentially personal loans that you can borrow over an extended term – typically more than five years. Long term loans are ideal for situations when you need to borrow a hefty sum of money, which you can then repay over a 5-10 year term. You could use a long term loan to finance big-ticket projects such as home refurbishments, business-related investments, purchase of fixed assets, etc.
Long term loans allow you to spread the cost of your venture into convenient monthly instalments over an extended term. This way, you get ample time to repay the debt, even if you only borrow a minor amount.
While long term loans ease the repayment process with affordable instalments, they accrue you more interest than short term loans. This is because the longer your loan has a balance, the longer you’ll have to pay interest on it.
So, you may end up accruing more interest over a 10-year loan than a 5-year loan. So, even if you get a loan offer with a nominal interest rate, you might end up paying more interest if the term is too long. Therefore, a long term loan might incur you extra cost overall.
When to consider a long term loan?
People seeking payment flexibility and smaller, affordable instalments while repaying their loan might find long-term loans a better credit solution. Moreover, these loans would be ideal for those with a variable or commission-based income since the monthly instalments are small and affordable.
To truly reap the benefits of a long term loan, apply with a lender who does not impose early repayments charges. Applying with such a lender will give you greater flexibility and more control over repayments. This way, you’ll be able to pay an extra sum now and then without incurring any additional costs.
However, it is best to consider the interest implications associated with long term loans beforehand. An extended-term could accumulate more interest for you. So, contemplate the pros and cons and check if the loan’s terms and conditions align with your ongoing financial situation.
How to apply for 10-year or long term personal loans?
- Work out a loan amount: Work up a budget following your monthly income and expenses. A long term loan requires patience and commitment. Check if there’s room in your budget for the loan’s repayments.
- Self-assess your credit: Checking your credit report beforehand will help you stay prepared for the application process. Plus, it’ll buy you some time to improve your credit score by settling outstanding debts, utility bills or disputing erroneous records on the credit report.
- Complete the online application procedure: Fill out a quick online application form with accurate information about your loan. Read the fine print, terms and conditions on the contract to check for additional charges.
- Compare your offers: Compare pre-approved offers to choose one that fits perfectly with your financial checklist. Both the interest rates and APRs are an integral part of your loan offer, so compare the interest and APR on all your offers to find the most suitable one.
- Disbursal: Once you choose a loan offer, your lender will run a hard credit enquiry to assess your repayment capability. As you complete the contractual formalities, the lender will disburse the money into your account. Use these funds responsibly and repay the instalments on time.
How to find the best long term loans (UK)?
Here’s what you should ask yourself while looking suitable for long term loans:
- What amount do you need to borrow?
- How long will it take you to repay this amount?
- Have you explored the market for offers?
Assess your monthly expenditure and plan out a suitable loan amount. You should only borrow an amount that you will afford to repay within the repayment period. You could start by creating a repayment strategy for the loan. Does your monthly budget have enough room for the loan’s repayments? Do you have a contingency for repayments in case something goes wrong? Ensure that you plan your loan accordingly.
After you’re through with the planning, the next step is to explore the loan market for suitable offers. Compare personalized loan offers with real interest rates and APRs from multiple lenders at the click of a button with LoanTube.
Pros and cons of a long term unsecured loan
- Long term loans have budget-friendly and convenient monthly instalments.
- It is easier to juggle the repayments for a long term loan with other debts and monthly household expenses.
- Depending on your credit score and financial history, you may be able to borrow a more significant amount of money.
- Long term loans incur more interest due to the length of the loan term (usually above five years).
- To avail of an unsecured long term loan at lower interest rates, you need to have a strong credit history and a good credit score.
- Not many lenders offer unsecured long term loans, so finding such a lender could be a bit of a challenge.
- Your lender may impose a penalty on the early repayment of the loan. So, it is crucial to check your contract for additional costs beforehand.
A long-term loan requires a great deal of patience, commitment and persistence. It is vital to fully understand the terms of the loan before signing the agreement. Be it for debt consolidation, financing a home improvement project, or covering unplanned medical bills, you can use a long-term loan for almost anything as long as you pay it back on time. Plan your repayments will help you avoid the possibility of a default. As long as you use your long term loan responsibly, it’ll help you boost your score and climb up the credit ladder.