Editor's choice: Upstart personal loans
- Work and education get you better rates
- Fair credit OK
- No prepayment penalty
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A long-term personal loan is a loan that has a repayment period of more than three years. Loan terms that are this lengthy are often used for big purchases — cars, boats, complicated surgeries or big weddings.
You still have monthly payments, just like a personal loan with a short repayment term, but the total amount you pay each month is generally smaller. However, it comes with a downside: You’ll pay more toward interest.
Usually, long-term personal loans are for amounts greater than $10,000. However, it depends on the lender — you might be able to find some for less.
Some lenders also only offer the largest loan amounts for the longest loan terms, so a long term it could be your only option if you want to borrow $50,000 or $100,000.
Like with any other type of personal loan, you have a choice between fixed- and variable- rates on a long-term loan. Fixed-rate loans have steady repayment amounts, while variable-rate loans have repayments that change based on the lending market.
A longer loan term means there’s more time for interest to add up, making it more expensive. There’s also more time for variable rates to fluctuate, making your repayments even less predictable than a variable-rate loan with a shorter term.
|LendingTree||Varies based on lender|
|Even Financial||84 months|
|Marcus by Goldman Sachs||72 months|
This connection service can help you quickly compare lenders that offer long-term loans. Its partners offer some of the longest terms out there for those that really want to stretch out their repayments. There are also options for borrowers of all credit types.
Another connection service, LendingTree works with partners offering a wide array of financing options beyond personal loans. While the loan amounts aren’t as high as Monevo’s partners and terms not quite as long, it could be a viable option for finding a quick, inexpensive loan.
SoFi might be best-known for student loan refinancing products, but it also provides long-term loans with a slew of perks from discounts on future loans and networking opportunities. It offers some of the largest loans out there for an online provider.
Even Financial is a connection service for to borrowers of all credit types. It could be particularly useful for those looking for a long-term debt consolidation solution. Take advantage of its advanced searches and debt refinancing calculator to find a loan tailored to your needs.
This direct online lender specializes in debt consolidation, though you can use the funds for any personal expense other than higher education costs.
It doesn’t change any fees and members can qualify for deferred payments after establishing a record of paying it back on time. But you won’t be able to borrow as much as with other lenders and you need strong credit to qualify.
Not necessarily. A shorter loan term may be better because you’ll pay less in interest, but your payments will likely be higher each month. On top of this, some lenders might charge higher rates for longer loan terms — especially local banks and credit unions.
Let’s take a look at an example. Say you had a $20,000 loan a 12.5% APR. A one-year term gives you $1781.66 in payments each month and $1,379.89 in interest over the course of the loan. A seven-year term gives $358 in monthly repayments, but the interest you pay more than seven times that amount: $10,108.
While it’s more expensive, it still might be worth the added interest to be able to keep your monthly costs down.
For example, let’s say you’re looking to borrow a $40,000 loan. You can choose between a 4-year term and a 7-year term, and the lender offers you the same interest rate for either. As the table below demonstrates, you’ll save thousands on interest with the shorter term, but your budget may be stretched thin with higher monthly payments.
|4-year loan||7-year loan|
|Difference||+ $9,608 more in interest|
Although a longer loan term may be more convenient and provide lower monthly payments, you may end up paying more in interest over the long haul. And if you aren’t sure, you can read our guide on how personal loans work to get a more clear picture of the borrowing process.
Applying for a long-term personal loan is rather straightforward and you should compare your options before getting to this step. As part of the application process, most lenders will want to take a look at a few things including:
If you’re applying for a secured loan, you’ll have to provide documents to prove ownership of the collateral in question.
A long-term personal loan could be just the right thing to tackle that home improvement or pay for your dream vacation. But if you aren’t careful, you may end up paying much more than you expected in interest. Having a budget in place and being sure you’re only borrowing as much as you need will help you avoid going into debt that you can’t afford.
Before committing to a lender, compare your personal loan options to see which lender can best suit your needs.
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