Long term loans

Long term loans can help reduce the size of your repayments and give you more time to pay off your loan.

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Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured on it.

What is a long term loan?

A long term loan is any loan product that’s designed to be paid off over more than five years, which is the standard limit for regular personal loans. While there are some unsecured loans that offer terms of up to 10 years, long term loans generally refer to secured loans, which are a type of personal loan that uses your home equity as collateral against the cost of the loan.

Pros and cons of long term loans


  • Smaller repayments. The lower the size of your monthly repayments, the more manageable the loan is likely to be as the cost of the loan is split over more instalments. This can make long term loans more attractive for those looking to spread the cost of a large expense over a number of years.
  • Lower interest rate. As secured loans represent less risk to the lender compared with other types of loan, you’ll generally receive a more competitive rate.
  • More flexibility. Long term secured loans generally offer an additional repayment option, which means you can pay off your loan more quickly and save on interest. The smaller size of repayments on a long term loan will also let you free up cash for other purposes.
  • More likely to be approved. You’ll generally have a better chance of getting a secured loan than you would an unsecured loan because of the associated risk for the lender.


  • You’ll pay more in interest. The main disadvantage of a long loan term is that the overall cost of the loan will be higher, as you’ll be paying interest over a longer period of time. Depending on the size and length of your loan, this could mean your loan ends up being much more expensive than the equivalent shorter-term loan.
  • Your equity is at risk. A secured loan requires you to use an existing asset as collateral, and this asset can be forfeited if you then fail to repay the loan.
  • Not available to everyone. If you don’t have equity in your home, or are unwilling to use it as security, you won’t be eligible for a secured, long term loan.
  • Limited options. Most lenders only offer personal loans of up to five years. If you want a secured or long term loan, it’s likely you’ll have to apply with a specialist lender.

Can you get a long term payday loan?

No, short-term or payday loans are only offered with limited loan terms, generally anywhere from one week up to six months, and should be paid back as soon as possible. The longer it takes you to repay your short-term loan, the more expensive it will be.

Long term loans for bad credit

A secured long term loan may be a suitable option if you have a poor credit rating. You’ll be considered a higher risk than someone with a good credit rating, so using security against your loan can help mitigate that risk for the lender, meaning you have a better chance of being approved.

As a longer loan term also reduces the size of your monthly payments, lenders may think you’ll be more likely to pay off the loan on time, which could also help your chance of approval. However, this may also work against you, as a longer loan term means there’s more time for your financial situation to change, and therefore more risk that you could default on the loan.

If you have bad credit, you’re also unlikely to get as competitive a rate, which is one of the major benefits of a secured, long term loan.

What are my other long term loan options?

Long term personal loan. Most lenders provide personal loans with terms of 1 to 5 years, but there are some unsecured personal loans that have terms of 10 years. However, this option may only be available to borrowers with good credit history, and you’ll have to check with a specific lender to see.

Credit card. You could also consider applying for a credit card, which offers ongoing access to an agreed credit limit. As long as your account remains open and you meet the minimum monthly repayment, you’ll be able to continue using your line of credit for as long as you need. Some credit card providers also offer extended interest-free periods, meaning you won’t have to pay any interest on the credit you use for up to two years.

Frequently asked questions

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