Long Term Personal Loans

If you're thinking about getting a personal loan, you have several elements to keep in mind before you even consider applying for a loan. You need to think about the amount you might want to borrow, the potential interest rates involved, and the exact length of the loan term.

We'll cover all these points in this guide, but before we move on to those factors, let's find out exactly what a long term loan is. We don't all have enough cash stashed away in savings accounts to negate the need for an occasional loan. If you can afford the monthly payment on the amount you're thinking of borrowing, this guide could help you learn more about the situation.

What are long term personal loans?

Long term loans cover a period of at least a year. A very common term is five years. This means you'd make monthly payments for 60 months. Depending on the length of the loan you go for it can be more or less than that. They contrast with short term loans that only last for up to a year (sometimes a bit longer).

A good way to think of it is to consider short term loans as having a repayment period of up to a maximum of five years. Long term loans last for up to fifteen years but often are in the range of five to seven years. That's broad, of course, but it's a reasonable starting point.

Some people think of a long term personal loan as lasting 10 years, while others might think short term loans cover anything up to a year.

You'll see there are other differences to consider too. For now, though, if you're wondering about borrowing money for a longer period, you're looking at long term loans rather than shorter ones.

Could you get a personal loan over 10 years?

You may sometimes find longer term personal loans that last for 10 years. The loan term you can go for usually depends on the amount you'd like to borrow. If you're not looking for a large loan amount, you won't be able to borrow for over such a long term. If your loan amount is around thirty to fifty thousand pounds, you may get a loan for over 10 years. You'd make 120 monthly repayments in this case, with each repayment coming out of your UK bank account.

Some people choose a longer loan term like this because it could prove more affordable, potentially giving lower monthly payments.

Of course, your personal circumstances could change in the space of 10 years, or indeed any loan term you go for. You may dream of making the final payment on your personal loan, but that's a few years into the future. If your situation changes and you miss payments, you could risk losing your home if you took out a secured loan.

Even an unsecured personal loan could potentially result in poor credit if you cannot pay it back. It could end in a county court judgement in some cases.

We recommend comparing loans via a service like Loanza, where you get personalised loan offers from multiple lenders, before committing to taking out a loan. Go through the loans you get quoted for to understand what amounts, terms and APRs are attainable for you. You could even consider financial advice for taking out long term personal loans.

What is the longest term on a personal loan?

The maximum repayment term on a loan like this could depend on the individual lender. Many long term loans run for up to 10 years, although other lenders may offer longer terms for unsecured loans for a UK resident.

Of course, the shorter the term, the faster the personal loan amount could be repaid. Extending the loan term over a longer period means you're likely to pay more interest. It's important to think about the total repayment period, the interest rate on a loan, and other factors such as the maximum APR applied to the loan.

Loanza could help you find a longer term personal loan to suit your requirements. Our network of online lenders may offer terms of up to 84 months for a loan amount. We're regulated by the Financial Conduct Authority too, so you can have confidence in our services as a credit broker.

The pros and cons of long term personal loans

Every financial product has advantages and disadvantages, as you'd expect. The most important thing is to make sure you know what these are, so you can see whether a long term personal loan might be the one you're looking for.

Advantages of long term loans

Let's cover some of the plus points you may come across with long term loans. Of course, all situations vary, but you may recognise some of these points.

You'll be able to spread out your monthly repayments

Spreading out payments is something we're all used to doing. It's even possible nowadays to do this with annual car insurance. Depending on the amount of cash you're after, you may find it next to impossible to repay it within just a year or two.

With long term loans, it's simpler to work out the possibilities and to see what's affordable for you. Indeed, it's usually best to work out some figures before you even think about applying for unsecured personal loans like these.

Interest rates could be lower than for short term loans

Long term loans, short term loans... it's not always easy to work out which one to get if you're looking to borrow money. Yet if you were to compare loans in each of these categories, you might find that interest rates for a long term loan could be lower than for a short term loan.

Long term loans may, therefore, offer you the chance to seek out a more affordable interest rate. Of course, there are other pointers to consider as well, so you'll need to balance all these factors when you're looking at long term loans.

You might be able to borrow more on a long term loan

Lenders tend to be more amenable to offering higher loan amounts to customers who tick the boxes for long term loans.

Of course, you'd still be applying for consumer credit and you'd still need to prove you could repay the amount by following the bank's application guidelines (or those of any other lender). But the possibilities are there to think about.

You've got more options with the repayment period

Every loan has monthly repayments to make. However, short term loans don't last long, so they always have limited wiggle room with how many monthly repayments you're going to make.

With long term loans, you've got more possibilities. Five, six, seven, eight, nine, or 10 years... you can think about which length may give you more affordable monthly payments.

Disadvantages of long term loans

Of course, there could be negatives to these loans as well. It's sensible to look at the whole picture, so you can get a realistic idea of whether they're for you. Take your time and assess all the pros and cons before you begin looking for a loan

There may be a charge if you repay the loan early

You'll need to read the details supplied with any loan you look at to find out whether this is the case in that instance. Lenders agree loan terms according to length, amount borrowed, interest rates, and other factors. If you repay it early, they'll lose out on some of the funds they'd have received through interest payments - hence the charge.

Missing repayments could also incur charges - and harm your credit record

It's always vital to make sure every monthly repayment reaches the lender on time. This is best done via direct debit, which you can set up with most bank accounts. (Check with your bank or building society if you're unsure.)

A late payment could trigger a fee, but missing repayments are more serious. These could potentially affect your credit score. Miss a few and your credit rating could well drop. It's one way some people could end up with a poor credit history, so be sure you always make those repayments on time.

You could end up paying more overall

No doubt the lower interest rates we mentioned above got your attention. However, it's important to recognise that you'll be making repayments over many more months.

This means you will pay back more than you would with a loan over the shorter term. Looking at the numbers, working out what you might be able to afford, and finding the total representative APR and amount to repay could all help you see where you stand.

Long term loan FAQs

We know you probably have questions surrounding long term loans, so we aim to answer some of those here for you. They'll help you understand more about these loans and whether they're right for your situation.

Does your credit score matter?

Depending on a person's credit score, loan offers may vary from one individual to another. The better your credit rating, the more chance you've got of finding lower interest rates for unsecured loans (or even secured ones, for that matter).

If you've got bad credit, some regular lenders might reject you for a loan based on your credit score. Powered by that knowledge, you may decide to consider lenders who only deal with people who have lower scores.

Of course, the more you can do to make sure you stay on top of a good score, the more promising your loan opportunities could be. It's still an idea to look around and see what you could find though.

What's the difference between secured loans and unsecured loans?

Secured ones need something to back them, i.e., some collateral. Many people use their property for this, but it does mean that you could lose it if you don't pay back the loan according to the terms.

Unsecured ones don't need any collateral, so they're more relevant for those who don't have anything of value to put up against them.

Can you repay a long term loan early?

Often, you can, but be aware this could involve early repayment fees. Lenders charge interest on loans, regardless of length or amount. If you make early repayment, the lender may not make as much from the loan as they expected. That's why some lenders have an early repayment fee in their terms.

Fortunately, you should be able to check in advance of applying for a long term loan, to see whether early repayments may incur such fees.

What does representative APR stand for?

Representative APR means the representative annual percentage rate on a loan. It's not the same as a standard APR figure. This would include the annual interest rate and any fees applied to the loan, so you can see what you'd repay over one year.

So... how does the representative APR differ from standard APR?

Well, this allows you to compare various loans from different lenders. If you see a representative example, you know that 51% or more of those who apply for that loan get the representative example rate or less.

It means that you could be shown several loans, each with a representative example (or representative APR, as you'd normally see it written). They're then easier to compare, so you can look for the most competitive interest rates you can find.

The most important thing here is to remember that you may not receive the representative APR shown. You may do, and there is a chance you could receive a lower rate too.

Conversely, the lender may end up offering you a higher rate than the representative example, but it at least gives you a sensible starting point.

Using a service like Loanza can take the guesswork out of this, and show you personalised offers with real interest rates you'd get if you applied with the lender.

Is there a maximum APR for these loans?

Lenders may focus on people with a certain credit score. For example, some might target those with a bad credit history, while others may only consider those with a good credit history. This is why you should always know whether you have a good credit rating or not as a UK resident.

Most lenders should display the maximum APR you might see on a specific loan. Assuming you look at loans intended for people with your credit record, whether that's for bad credit, poor credit, outstanding credit, or anything else, you should see what the maximum might turn out to be.

Many applicants will be offered an interest rate below the maximum APR - sometimes far below it. It's easier to at least know the maximum though, as it gives you an upper limit. Remember too that you're not obliged to go ahead with any offer you may receive.

Always work out your sums, consider whether you've found a competitive loan, and double-check everything before making a proper application for any loan.

Could Loanza help you find long term loans?

Are you looking for a long term loan to help finance home improvements, buy a car, or to help with consolidating existing borrowing? Loanza may be able to help.

We're not a lender - we're a credit broker with a network of 50+ lenders to draw from. If you think you might apply for a long term loan, you could be closer to receiving a personalised loan offer than you might think.

We have a registered office in Glasgow, you can check our firm reference number, issued by the Financial Conduct Authority, and you'll know we're transparent and above board.

How to complete our form to find out more

If you check out our homepage, you'll see we have a personal loans option there. You can choose your preferred loan term there, ranging from 12 months to 84 months. That's equal to seven years at the upper end of the scale.

You can then choose why you'd like to apply for a long term loan, simply by going for one of our six options. You'll find our form sensible and straightforward, designed especially for those who are looking for a competitive loan offer.

If you're ready to get started, begin filling it in today and we'll see which of our many lenders could have a loan offer for you to consider.