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How to get a long-term personal loan
- Set a monthly budget. Know how much you can afford to pay each month to help you choose a term you can comfortably afford and pick a lender that fits the bill.
- Compare lenders. Cast a wide net by looking at personal loans from banks, credit unions and online lenders with minimum requirements that you meetpare factors like terms, interest rates, fees – including whether it has an origination fee – and loan amounts.
- Prequalify. Get an estimate of the rates, terms and loan amount you might qualify for with a few of the providers you narrow your list down to. You can usually do this by filling out a short online https://worldloans.online/title-loans-tx/ form or calling the lender.
- Complete the application. After you select a lender, follow the directions to provide more information and submit documents like recent pay stubs and bank statements.
- Sign the documents. Review your rate, terms and due date before signing and submitting your contract.
If you apply with an online lender, or bank or credit union that you have an account with, you can receive your funds as soon as the next business day. Otherwise it could take a few business days or even a few weeks.
What is a long-term loan?
Technically, a long-term loan is any loan with a repayment term over 12 months. But the longest term available on most personal loans is 84 months – or seven years. In some cases, long-term personal loans are only available on higher loan amounts. If you borrow up to the maximum a lender offers – say $50,000 or $100,000 – the longest term could be your only option.
When to get a long-term personal loan
A long-term personal loan is most useful on large loan amounts – say over $10,000. A long-term personal loan spreads out repayments over a longer period of time to help it fit into your monthly budget. Some lenders also offer lower rates on higher loan amounts to offset the high overall cost of a long term.
If you have a credit score above 670 – what lenders consider to be good credit – you could have an easier time qualifying for low enough rates and loan amounts to make a long-term personal loan worth it. But often short-term loans are the only options available to people with bad credit scores, or those below 580.
Where to get a long-term loan
Long-term loans are available at most personal loan providers. This includes banks, credit unions and online lenders. If you don’t have a lot of time to compare providers, you can also compare offers from multiple lenders by using a connection service like Monevo.
Generally, payday lenders and installment loan providers – known as short-term lenders – don’t offer terms longer than a few months or a year.
How to qualify for a long-term loan
- Employed
- Debt-to-income ratio below 43%
- Over 18 years old
- US citizen or permanent resident
Your credit score and income can also have an affect on your term. You’ll have the most options with a good credit score. The lower your credit score, the higher your interest rate, which can make the monthly repayments on a long-term loan unaffordable.
Is a long loan term better than a short term?
Long loan terms aren’t necessarily better than short ones. Long-term personal loans stretch repayments over a longer period of time. This lowers your monthly payment amount. But it also leaves more time for interest to add up and keeps you in debt for longer.
On top of this, some lenders will charge a higher interest rate for a longer term – especially local banks and credit unions. With a high interest rate, the monthly savings on a longer term might not be worth the costs compared to a lower rate.
Long-term loan examples
Here’s how much your monthly payments and total cost on a $10,000 loan could be at different terms. The rates in this example are based on the lowest available rates on different terms from Alliant Credit Union in .