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LONG TERM PERSONAL LOANS

Before taking out personal loans, one of the main things to watch out for is the monthly payment amount and the terms. You must ensure that you can afford it to maintain your credit. If a loan’s monthly payments are high and unmanageable, you can lower them by extending the loan’s term/duration.

Applying does NOT affect

your FICO® credit score!


What are long term personal loans?

Personal loans come with fixed monthly payments for the entire loan term. Typical loan terms range from 3 months to 60 months. When the term exceeds 5 years or 60 months, the loan is considered a long-term personal loan.

The main advantage of long-term personal loans is that they can be more affordable than short-term personal loans of similar loan amounts. To understand the concept, here is a quick loan comparison of two loan products over different terms. (P.S. You can use any free online personal loans calculator to verify the figures).

John earns $2000 per month at his current job. After he deducts all his monthly debt obligations, fixed expenses e.g. rent, and budget for variable expenses, he is only left with $350 to serve as his discretionary income. He approaches an online lender for a personal loan worth $20000 and receives two loan quotes for long and short terms. Which product is best suited for his budget?

Loan A


Loan amount Loan term Interest rate Monthly payment Total interest on loan Total amount repaid
$20,000 36 months 10% $645.34 $3232 $23,232

Loan B


Loan amount Loan term Interest rate Monthly payment Total interest on loan Total amount repaid
$20,000 84 months 10% $332.02 $7890 $27,890

John can’t afford to pay Loan A because the monthly payment amount is $645.34, which is higher than his discretionary income. However, he can afford Loan B with a term of up to 7 years because the monthly repayment is $332.02. The only downside to Loan B is that he will have to pay $4658 more in interest.


Advantages of a long-term personal loan

1) Allows you to borrow more cash Lenders are willing to offer high loan amounts on long-term loans. That’s because the monthly payments are still affordable. What’s more, it’s easier for a borrower to default on a short-term loan that a long-term loan.

2) Improve your credit score You get an opportunity to significantly improve your credit scores, provided you find a lender who reports repayments to two or more credit bureaus. Just make on-time monthly payments, and your credit score will improve. A good credit score allows you to qualify for future loans at a better rate.

3) Reduced interest rates Long-term personal loans spanning 5 years and more come with a lower rate than short-term options like payday loans.

4) Affordability The loans are affordable even to borrowers with low income or poor credit history.

5) High approval rate If your financial situation is not perfect at the moment, or you have a poor credit history, you’re still readily offered a loan by online lenders. Some lenders even cater to individuals with poor credit and specialize in loans that don’t require credit checks. Unlike banks, these lenders have less strict underwriting criteria and are more risk-tolerant. Don’t worry if you have a poor credit score. You will find numerous options with a credit score as low as 600 when you apply through Nation21Loans. Of course, having better credit just means you can get a better deal.

6) Finance major purchases Larger loan amounts are useful for big purchases, whether you need 50 000, 35 000, or even somewhat less. You can also use them for debt consolidation, even for debt on credit cards. Consolidating your debt entails lumping them together and having one monthly payment to cater to all of them, which also helps improve credit long term. You can also clear credit balances with high-interest rates on long-term loans.


Disadvantages of a long-term personal loan

There are downsides to long-term personal loans, including:

1) You’re in debt longer Living a debt-free life is the financial goal of many. You get to keep all your income when you receive it. However, long-term loans entail being in debt longer.

2) Fewer options Not many lenders offer long-term personal loans compared to short-term forms of credit like credit cards, payday loans, etc.

3) Higher risk of making late payments You will have many loan payments to make considering the long-term nature and rate of the loan. If your financial situation changes down the line, you might encounter a late payment on your long-term loan, which places your credit score at risk.

Applying does NOT affect

your FICO® credit score!


Where can I get a long-term personal loan?

You may obtain these long-term loans from:

  • Banks
  • Credit unions
  • Online Lenders

When should I get a long term personal loan?

Long-term personal loans are significant undertakings. Only borrow them after carefully analyzing your current financial position and future financial goals, as well as the terms and rate of the loan so you don’t put your credit at risk. For instance, if you want to be debt-free in 4 years, then the long-term loan might be unsuitable. Similarly, if you’re hoping to take out a mortgage in the future, ensure you have less debt, improved credit, and a low DTI ratio.

Here are more scenarios to consider:

  • When it’s okay
  • Not recommended
  • Debt consolidation, big purchases, investments, home improvements.
  • Paying recurring monthly expenses like rent.
  • When you have a long-term financial plan in place and want to improve your credit score.
  • If your income is sufficient for the rate and repayments for the loan terms. It’s also good to have liquid assets you can use in case you lose your income.
  • If you’re living paycheck-to-paycheck and don’t have the cash to cater for loan repayments over the loan term.

How long can you stretch out a personal loan?

Long-term personal loans may even have terms of 10 to 15 years. Short-term loans with terms under 60 months can be stretched when you refinance them. Refinancing entails borrowing a second loan from the same lender to pay off the balance on the old loan. Any leftover amount is deposited in your account, and you continue making repayments on the new loan. However, it’s important to keep repaying to maintain your credit.


How to apply for a long-term personal loan

Applying for personal loans is straightforward. Start by finding qualified lenders when you apply through Nation21Loans. Lenders in our network offer both short and long term loans. Just click “Apply Now” and complete our online application form. You’ll then receive loan offers in your inbox in mere minutes.

Applying does NOT affect

your FICO® credit score!


Do you have any further questions?