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Last updated: 04/09/2020 | Estimated Reading Time: 4 minutes

Long Term Loans

If you are searching for a loan, but don’t think you’ll be able to pay it back for a while, then a long term loan may be the best option for you. You could spread the cost of a loan over five years or more to make your repayments much more manageable. Read our useful guide to find out more about long term loans.

In This Guide:

What is a long term loan?

Long term loans are loans that are paid off over anywhere from 1 year to 30+ years, though most long term loans will be between 1 and 15 years. Loans with terms longer than 15 years will normally be secured against an asset, lowering the risk to the lender. Long term personal loans spread the cost over a longer period of time making the repayments lower and easier to afford.

Smaller repayments make paying off the loan easier but remember that long term loans are more expensive overall because you will end up paying more in interest.

How to find the best long term loan

If you’re thinking of applying for a long term loan then make sure you have considered the following questions carefully:

  1. How much do you need to borrow?
  2. How long will you pay it back over?
  3. Have you compared long term loans to find the cheapest loan option?

Once you have carefully considered how much you want to borrow and how long you will need to pay it back, comparing loans is an important next step. Compare hundreds of different loan options online to find a long term loan that fits your needs.

When choosing a long term loan there are some further considerations to think about before you apply:

  • Lender borrowing rules – always remember to check the bank’s application guidelines before submitting your application.
  • Interest rate type – check whether the interest rate on your loan is fixed or variable. Most personal long term loans will fix the interest rate, but look out for variable rates. They can be much harder to budget for and could cause problems if they are increased during your repayment plan. Alternatively, they could go down, meaning that your repayments will cost you less.
  • Secured vs. unsecured – long terms loans will often be secured against your assets, so if you don’t make repayments on time your lender can seize or sell your assets. Depending on how long you are borrowing for, it can be hard to find an unsecured loan.
  • Early repayment – Paying back your loan in full early could save you a lot of money as you will avoid interest costs. However, some lenders charge an early repayment fee, so be sure to check before you apply.

Advantages and disadvantages of long term loans

Some of the benefits of taking out a long term personal loan include:

  • Affordable repayment plan – spreading out the cost of your loan over a longer time period lowers the monthly repayments.
  • Competitive interest rates – long term personal loans often have lower interest rates than normal loans.
  • Large loan amounts available – banks are happy to loan you large amounts of money when you’re repaying the loan over a longer time period.
  • Lender availability – there are many different lenders to choose from with long term loans.

There are also some disadvantages to taking out a long term loans including:

  • Early repayment charges – some lenders can charge you if you make early repayments.
  • Missing repayments – lenders will also have fees if you miss your monthly repayments. If you consistently miss repayments and your loan is secured then your lender could also sell your assets.

Long term loans with bad credit

Long term loans are available for those with a bad credit history, but they will often have higher interest rates. If you are struggling with existing debt then a long term loan could be a good way to improve your financial position. You can consolidate your debt and hopefully reduce monthly outgoings.

If you have bad credit, lenders will look closely at your credit rating, probably offering you a secured loan with a higher APR. Secured loans are common, but you need to make sure you don’t miss monthly repayments or you could risk losing your home. Always remember to make sure you can afford repayments before you apply for a loan. If in doubt, don’t apply!


Do I have to be a homeowner to apply for a long term loan?

You do not have to be a homeowner to apply for a long term loan. As a non-homeowner you can still get loans lasting up to ten years.

What is an instalment loan?

Instalment loans are just another name for normal loans. It relates to the monthly instalment payments you have to make with a loan.


Can I get a long term loan with no guarantor?

For those with bad credit, you may think that you will need a guarantor in order to successfully apply for a long term loan. This isn’t necessarily true, but it may improve the chances of a successful application.