Long-Term Personal Loans: What To Know

A long-term personal loan can help you pay for a major expense if you don’t have enough cash on hand. By borrowing a lump sum and repaying it over many years, you can break up a big purchase into manageable monthly payments. But the longer your loan term, the more you’ll pay in the long run because of interest. That’s why it’s important to compare lenders to find the best rates.

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Best long-term personal loans

The best long-term personal loans pair low rates with long repayment terms (five years or more) and generous maximum loan amounts. These loans are built to make large expenses affordable, such as a wedding, major debt consolidation, or home renovations. To find the best long-term personal loan, prequalify with multiple lenders before you apply. 

Prequalification is like getting one or more personal loan quotes — it won't hurt your credit and it's not an offer of credit, but can give you a good idea of what you might qualify for and which lenders are most likely to approve you. Once you choose a lender to apply with, that lender will conduct a hard credit inquiry which could temporarily ding your score by a few points.

Methodology

Credible evaluated the best long-term personal loans based on factors such as customer experience, minimum fixed rate, maximum loan amount, funding time, loan terms, fees, discounts, and whether cosigners are accepted. Credible’s team of experts gathered information from each lender’s website, customer service department, in-house resources, and via email support. Each data point was verified to make sure it was accurate at the time of publication.

How to compare long-term personal loans

Comparing personal loans can help you save money and find a loan that works for you. When researching personal loans, compare the following:

• Interest rate: A loan’s interest rate represents the cost of borrowing. A lower interest rate means you’ll pay less over the life of the loan. Even a small difference in interest rate can lead to major savings.
• Loan amounts: Different lenders have different maximum loan amounts. Make sure the lenders you consider offer the amount you require. Lenders typically offer loans as small as $600 to as much as $200,000.
• Repayment terms: Long-term personal loans tend to have repayment terms of five years or more. You may have smaller monthly payments with a longer repayment term, but you’ll pay more in interest overall.
• Fees: Application fees, origination fees, late fees, and prepayment fees are common with personal loans. Compare lenders with few or no fees if you want to cut down on costs.
• Cosigner option: A cosigner is someone who agrees to repay your loan if you default. For this reason, applying with a cosigner can make it easier to qualify for a better interest rate. If you don’t have good credit, but know someone who does and is willing to act as a cosigner, find a lender that allows you to add them to your application.
• Time to fund: Some lenders can fund a loan the same day you sign the agreement, but others may take up to a week. If you need your loan funds as soon as possible, find a lender that offers fast funding.

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How do long-term personal loans work?

Long-term personal loans are like other personal loans, except they have longer repayment terms. Typical term lengths range from one to seven years, but some lenders may offer longer terms.

When you take out a long-term personal loan, you receive the full loan amount upfront in a single lump sum. The balance begins earning interest, and you start making monthly payments to gradually repay the loan.

Long-term personal loans allow you to stretch your repayment over a longer period of time. Because of this, there’s a higher risk of default — and lenders take on more risk by offering them. To compensate, long-term personal loans often have higher APRs than short-term loans.

While long-term loans may have lower monthly payments, they also have higher interest rates and a longer repayment period, which means you’ll pay more to borrow. That’s why long-term loans are best for bigger expenses you can’t pay off quickly. These might include:

• Debt consolidation: If you have a large amount of high-interest debt, you can consolidate it into a single monthly payment — potentially with a lower interest rate.
• Medical bills: Medical bills can be costly, and sometimes they’re unexpected. A long-term loan can help you pay large bills in smaller monthly installments.
• Home repairs: A long-term loan can finance major home repairs, especially if you don’t have enough equity in your home to qualify for a home equity loan or line of credit.

Short-term vs. long-term personal loans

Short-term personal loans and long-term personal loans work the same way — the only major difference is the length of the repayment terms. While long-term personal loans have terms of five years or more, short-term loans have much shorter repayment periods — generally less than three years.

Because long-term loans spread your payments out over more time, they may have smaller monthly payments compared to short-term loans. But, as mentioned above, you’ll likely pay more over the life of the loan because you’ll have to make interest payments for a longer period of time.

For example, let’s say you want to borrow $50,000. You qualify for an interest rate of 9.50%, and you can choose between a three-year term and a seven-year term. (Note that interest rates may vary based on repayment terms, but we’ll keep it consistent for the sake of this example).

To figure out how much each loan will cost — in terms of monthly payments and total cost — you run the numbers with a personal loan calculator.

This example shows that a long-term loan saves you money in the short term with smaller monthly payments. But you’ll end up paying a lot more over the life of the loan.

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Pros and cons of long-term personal loans

Before applying for a long-term personal loan, weigh the advantages and disadvantages of this big financial decision:

Pros

• Smaller monthly payments: Spreading your loan repayment over a longer period of time can make monthly payments more manageable.
• Fund nonnegotiable expenses: Certain home repairs, medical expenses, or other emergencies can’t wait. Long-term loans allow you to pay for them by spreading the cost over several years.
• Borrow large sums: Long-term loans tend to offer larger loan amounts — as much as $200,000.

Cons

• Higher APR: Because long-term loans are riskier on the lender’s end, they may compensate with higher APRs.
• Higher long-term costs: The longer your loan repayment term, the more interest payments you’ll have to make. That means you’ll pay more to borrow in the long run.
• Can be tough to qualify: Due to the high loan amounts and the lender’s increased risk, long-term loans can have stricter eligibility requirements than short-term loans.

How to get a long-term personal loan

Getting a long-term personal loan is similar to getting any other personal loan. Though the process can vary by lender, in general, you’ll follow these steps:

1. Compare lenders: Research different lenders to find one that offers competitive interest rates and terms that work for your budget and timeline.
2. Prequalify: Prequalification doesn’t guarantee your loan terms and APR, but it can give you a better idea of what you’ll qualify for — without a hard credit pull. If a lender allows it, prequalifying for a loan can help you make a more informed decision. It’s important to note that prequalification is not an offer of credit, and your final rate may differ.
3. Pick a loan option: After comparing lenders and prequalifying where possible, pick a lender and loan option. You can use a personal loan calculator to estimate monthly payments and the total cost of the loan.
4. Complete the application: Fill out the lender’s application with your personal and financial details. Be prepared to provide proof of income and employment, too. At this point the lender will conduct a hard credit check, which can temporarily lower your score by a few points.
5. Get your funds: If the lender approves your application, you’ll receive a loan agreement to review and sign. Then you’ll wait for your funds to arrive — typically via direct deposit in as little as the same or next business day, depending on your lender.

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Long-term personal loan FAQ

Where can I get long-term personal loans?

You can get long-term personal loans from banks, credit unions, and online lenders. Terms, APRs, and eligibility requirements vary by lender, so compare plenty of options from each type of lender.

Can I get a long-term loan with bad credit?

It’s possible to get a long-term loan with bad credit, but you might have to pay a high APR or apply with a cosigner to do so. Many lenders require a FICO score in the “fair” range (580-669) at minimum, but there are some lenders who offer personal loans for bad credit borrowers. If you have bad credit, make sure you focus on lenders that are willing to work with people in similar financial situations.

Should I get a long-term loan or a short-term loan?

The decision to get a long-term loan or short-term loan depends on your personal and financial circumstances. Long-term loans are often better for large purchases. They often have higher loan limits and lower monthly payments — but you’ll pay more in interest. Short-term loans may have higher monthly payments, but you’ll pay less interest over the life of the loan.