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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.
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.
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.
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.
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