Best Long-Term Personal Loans

A long-term on a personal loan spreads your loan payments over more months or years to keep them low, while still allowing you to pay extra toward your balance when your budget allows.

But there are some downsides to long-term personal loans. They often have higher interest rates than short-term loans, and a lender may require you to have a stronger credit profile to qualify. Here's what you need to know before borrowing and selecting a long repayment term — five years or longer. 

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Best long-term personal loan lenders

The following lenders offer personal loans with maximum repayment terms of at least six years. Depending on the lender and the purpose of the loan, terms can last up to seven, 10, 12, or 20 years.

Other lenders offering long-term personal loans include Wells Fargo (up to seven years) and Navy Federal Credit Union (up to 15 years for home improvement loans).

What is a long-term personal loan?

Long-term personal loans are typically installment loans with repayment periods lasting between two and seven years. Some lenders offer longer terms for certain purposes, such as LightStream, with terms of up to 12 years for boat loans and RV loans and up to 20 years for home improvement loans. BHG Financial, which offers loans of up to $250,000, has a maximum repayment term of 10 years.

With a personal loan, you receive the money in a lump sum, minus any upfront lender fees such as an origination fee. Then you repay the loan's principal (the amount you borrowed) plus interest, split into equal monthly payments. 

Lenders typically offer unsecured long-term personal loans, meaning your loan isn't tied to any collateral, like a vehicle or your home. However, you can sometimes find secured long-term loans, which require you to pledge an item of value as security for the loan. Secured loans are less risky to lenders, so you may qualify for a lower annual percentage rate, or APR. But because you have an asset attached to them, the lender can gain ownership of your asset if you don't repay the loan.

Compare: Secured vs. Unsecured Loans

Long-term vs. short-term loans

Long-term and short-term loans work the same way: You'll apply, receive funds, and repay the loan to the lender. But there's one significant difference: "Moving from 36 to 60 or 84 months often comes with a noticeable rate increase since the lender is taking on greater risk," says Miriam Mitchell, Chief Lending Officer of Addition Financial Credit Union. That means you could pay much more overall for your loan the longer your repayment term is.

That said, stretching your balance over a longer term may lower your monthly payment significantly compared to a short-term loan. A short-term loan can put more pressure on your monthly budget, but you’ll also have fewer payments, leading to paying off your debt faster and a lower total interest cost. 

Pros and cons of long-term personal loans

Weigh the pros and cons of long-term personal loans before comparing loan options.

Pros

• More time to pay: You'll have more time to repay your loan, which is helpful if you want to finance a large purchase or consolidate a large amount of debt.
• Smaller monthly payments: Having more time to finance a loan means smaller monthly payments, which can help you better manage your budget.
• Larger borrowing amounts: You may be able to borrow $100,000 or more with a long-term loan, depending on the lender and other factors. 
• Multiple loan purposes: You can use a long-term personal loan for various purposes, including consolidating debt, covering medical bills, or paying for home repairs or renovations.
• May improve credit over time: Adding an installment loan, making on-time payments, and managing other debt wisely while paying off your loan can help you build credit. Payment history accounts for 35% of your FICO score, and the amount of debt you owe makes up 30%.
• Quick funding: Some lenders fund personal loans as soon as the same day you're approved. Non same-day loans are often disbursed within a few business days.
• Can pay off early: You aren’t locked into a long repayment period with a long-term loan since you can make larger payments as you’re able or pay it off early. Prepayment penalties are rare to non-existent in the world of personal loans.

Cons

• May have higher interest rates: Long-term loans typically come with higher APRs than short-term loans, leading to much higher interest costs compared to a loan with a shorter term and lower rate.
• Stricter requirements: The increased risk of a long-term loan may cause a lender to only approve borrowers with strong credit profiles, large incomes, and stable employment histories.
• Could impact ability to qualify for future loans: Lenders consider the current debt you have when deciding whether to approve you for a new loan. A long-term loan creates a debt obligation for years (unless you pay it off early), which could potentially limit your borrowing options during that time.  

When should you get a long-term personal loan?

Choosing a long-term personal loan instead of a short-term loan might be ideal if one or more of the following situations apply to you.

You need a lower monthly payment

If you borrow, say, $20,000 over four years, you'll have a lower monthly payment than you would borrowing the same amount over two years. A smaller payment can be helpful if you’re worried about being able to afford a larger payment.

A lower monthly payment can also give you more flexibility to pay off your loan. "While the required payment is smaller, borrowers can always make additional principal payments to pay down the loan faster without being locked into a higher monthly obligation," says Mitchell. 

You want to borrow a large amount

The larger your loan, the more it may make more sense to have a longer repayment term. For example, paying off $50,000 in two years at 15% APR could give you a monthly payment of around $2,400, whereas a five-year loan at 18% APR could have a monthly payment of $1,270. Covering large expenses, like home renovations or a wedding, could warrant a long-term personal loan. 

It could also be easier for you to qualify for a larger loan amount because the lower monthly payment won't have as drastic an impact on your debt-to-income ratio, says Mitchell.

Debt-to-income (DTI) ratio compares your monthly debts to income. Lenders use it to gauge how much you can safely borrow, with a lower DTI potentially improving approval odds and APRs. Lenders typically prefer a DTI below 36% for personal loans.

You can calculate your DTI using the Consumer Financial Protection Bureau's DTI calculator.

You have a lot of high-interest debt

With a long-term loan, you can consolidate high-interest debts by using the loan to pay off the debts, thereby combining multiple payments into one. This streamlined path to payoff may also reduce the interest you pay, make repayment more manageable, create room in your budget, and protect your credit.

However, Todd Christensen, a financial educator and counselor and the Housing Counseling and Education Manager for Debt Reduction Services, stresses the importance of managing your credit use going forward for a long-term debt consolidation loan to work for you. "Borrowers should strongly consider closing the paid-off credit card accounts after consolidation to avoid the temptation to overspend, which could lead to doubling their debt instead of reducing it," he says.

If you'd like to keep your accounts open to maintain the length of your credit history (it accounts for 15% of your FICO score) avoid using them for new spending while paying off the loan.

You have a good credit score

Because long-term loans typically have higher APRs than short-term loans, having good-to-excellent credit could help you avoid the highest interest rates. For example, consider approximate average personal loan rates on five-year loans selected by borrowers who prequalified through the Credible marketplace:

• Fair credit (580-669 FICO): 31%
• Good credit (670-739 FICO): 24%
• Very good credit (740-799 FICO): 18%
• Excellent credit (800-850 FICO): 16%

Before applying, see where your credit score stands by using Credible's free credit-monitoring tool.

Tips on choosing the best loan term length

Before taking out a personal loan, consider how your repayment term could affect your finances now and in the future. 

For example, Mitchell says that a short-term loan may be best for borrowers nearing retirement, as it "helps them eliminate debt in advance, supporting stronger financial stability as they transition out of the workforce." Similarly, Christensen generally recommends a short-term loan if financing something that you'll use or could wear out before paying the loan off, like a vacation. "Borrowers feel penalized for something they're no longer using but still paying for," he adds.

On the other hand, if a lower monthly payment is your priority or you're financing something long-lasting, like a home improvement project, a long-term personal loan could be the best option. 

The table below illustrates what you might expect to pay for a $20,000 loan with an 18% APR over 36-, 60-, and 84-month terms. You can see that the monthly payment is lower as the loan term is extended, but the total interest paid is much higher.

Long-term personal loan application process

Applying for a long-term loan usually involves a few steps, from checking your credit to submitting documents. While exact requirements vary by lender, here's what to expect:

1. Check your credit: Review your credit before applying so you know what lenders will see, which can help you anticipate your approval odds (and avoid surprises).
2. Solidify your budget: Map your income and expenses to determine a comfortable loan payment. Remember to give yourself a little wiggle room for emergency expenses and savings each month.
3. Compare lenders: Research multiple lenders to compare rates, fees, terms, and eligibility. Narrow your options to those that best match your borrowing needs. 
4. Prequalify: Many lenders offer prequalification to check your potential rate without affecting your credit. The rates and terms of a loan offer may differ from your prequalification results, however, and a loan application typically involves a hard credit inquiry that could affect your credit score.
5. Gather documents: Check your chosen lender's application and documentation requirements. Usually, you'll need a form of identification, proof of address, and income and employment verification documents, like pay stubs or a signed letter from your employer. 
6. Apply: Submit an application and attach required documents using your lender's online portal or in-person process. This is when a lender usually conducts a hard credit check, which temporarily lowers your score — typically by a few points for up to one year.
7. Review the loan agreement: Carefully read the final terms of your loan, including your repayment schedule, rate, and fees. Only sign if you understand and agree to all terms.
8. Receive funds: Your lender will review your signed loan agreement and documents and send the loan funds to you, sometimes as soon as the same or next business day. With debt consolidation loans, some lenders offer to send the funds directly to your creditors.

How to best manage your long-term loan

Managing your long-term loan well can help you better afford it and build your credit. Consider these tips:

• Balance short- and long-term affordability: Choose the smallest loan amount you need and the shortest term available that gives you a monthly payment you can afford. Use a loan calculator to compare monthly payments and the amount of interest you'll pay over the loan term.
• Build a cushion: Keep money equivalent to at least 3 to 6 months of monthly expenses in a savings account as a safety net if a major expense or drop in income affects your budget.
• Set up autopay: Many online lenders offer automatic payments for loans, which can help you pay your loan on time. "Scheduling the payment about a week before the due date creates a buffer to catch any potential processing glitches and avoid late fees or credit damage," says Christensen. As an added perk, some lenders, like SoFi, discount your interest rate when you set up autopay. 
• Make half payments: If your lender allows, pay half your loan payment every two weeks rather than monthly. You'll make 13 loan payments annually instead of 12, placing you one step closer to paying off your loan faster. It could also make your loan payment feel more manageable each month and save you hundreds or thousands in interest.
• Explore refinancing: Keep an eye on loan rates throughout your loan term. If they drop lower than your current rate, consider refinancing to shorten your term or reduce monthly payments. Factor in fees to make sure you don't reset any progress you've already made toward paying off your loan. 

Methodology

Credible evaluated 32 lenders across 1,216 data points to find the best long-term personal loans. We chose the best lenders based on the following weighted categories:

• Rates and fees: 18.75%
• Eligibility and options for bad and no credit: 17.5%
• Availability: 12.5%
• Loan amounts and terms: 10%
• Customer satisfaction: 10%
• Customer service: 10%
• Efficiency and fund delivery: 10%
• Discounts: 7.5%
• Credible proprietary data: 3.75%

Credible’s team of experts gathered information from each lender’s website and from our partners directly. We also considered each of our partner lenders’ statistics over a 12-month period — including average funding times, average credit scores for approved applicants, and average rates. Each data point is verified by a senior editor to make sure it’s accurate at the time of publication. 

Learn more about how Credible rates lenders by exploring our personal loans lender rating methodology.