Long-term Loans

A long term loan lets you spread the costs of your repayments from one to up to 30 years. This flexibility can often make your monthly payments more manageable than short term loans. However, they usually result in higher borrowing costs overall and can potentially mean you are still paying off your debt in decades to come.

What are long term loans?

Long term loans are a form of loan agreement that is typically repaid within a timespan longer than a year. It means you’re able to spread the cost over time, usually at lower interest rates than short term loans.

However, while the repayments are more manageable, overall you’re likely to pay more than short term loans because of the interest payable over a longer term.

Benefits of choosing a long term loan

Long term loans usually allow you to borrow large amounts of money and then spread the costs into manageable monthly repayments over one to 30 years. They are often offered at a lower APR than short term loans, helping you to manage your finances more effectively.

Risks of choosing a long term loan

While the interest rates are lower each month, the longer the terms of your loan, the more interest you will end up paying overall.

Long term loans can also make it tricky to plan for the future, as you still could be paying off your loan in years to come. If you want to pay it off early, you’ll also face an early repayment fee.

Long term loans vs short term loans

The main difference between long term and short term loans is the period over which it is repaid.

A short term loan is often repaid weekly or monthly, over a shorter timescale, while long term loans can span years or even decades. Interest rates are often higher for short term borrowing, while long term loans are designed with a lower rate of interest over a longer period, meaning you may pay a lot more in interest overall.

Which type of loan is more suitable to you depends on your circumstances, so it is important to weigh up the differences before choosing.

Applying for a long term loan

When choosing between a long term and short term loan, it’s important to evaluate what you can afford to pay back, over a repayment period that suits you.

With long term loans, lenders may pay closer attention to your credit rating to understand your financial circumstances and make a decision of whether you can afford the repayments in one, two or even ten years’ time. Therefore, make sure your credit report is up to date and without errors before applying.

What do I need to apply for a long term loan?

You can start your application for a long term loan online with just a few details to hand, including:

• Name and address
• Employment status
• Details of your income

We will then get in touch to discuss your requirements, so it’s a good idea to have information handy regarding what you need the loan for, and whether you are taking out a loan to consolidate debts.