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Should You Get a Long-Term Personal Loan?

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When you take out a loan, you usually have options regarding how much you want to take out and how long you want the repayment term to be. Personal loans are no different.

In this article, we’ll go over what the loan terms are for long-term personal loans, how they compare to shorter loan terms and whether or not you should consider one.

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What Is a Long-Term Personal Loan and How Does It Work?

A personal loan with repayment terms of five or more years is considered a long-term loan. The industry standard is to count personal loan terms in months. If you see anything with a repayment term between 12 – 60 months, that’s a short-term personal loan. Long-term personal loans will have terms over 60 months – usually 72 months to 120 months.

Both long-term and short-term personal loans operate in the same basic way. You apply for the loan and the lender either approves or denies the loan. If you get approved, the lender disburses the funds to you.

Flexibility is one of the biggest draws of a personal loan, regardless of the loan term. But once you’ve received the funds, you’ll be responsible for paying the loan back. The loan term you choose will affect your monthly payment and how much interest you pay over the life of the loan.

Do long-term personal loans cost more?

The basic tradeoff that comes with extending any loan term is that you lower your monthly payment while increasing what you’ll pay in interest over the life of the loan. Choosing a long-term personal loan means you’ll pay less each month, but over the entire repayment period, you’ll pay more.

This is important to understand even within the same category of loan. For example, a loan with a 120-month loan term and one with an 84-month term are both long-term loans. Your monthly payment will be higher with the 84-month loan, but you’ll pay more overall with the 120-month loan.

What Are the Benefits and Drawbacks To Getting a Long-Term Personal Loan?

To know if this type of loan is right for you, you’ll need to understand the pros and cons of long-term personal loans.

PROS of long-term personal loans👍

Lower monthly payments

Extending the loan term will lower your monthly payment. This can help make the loan more affordable right now.

Better interest rates than credit cards

Credit card companies traditionally charge higher interest rates than you may get offered with a long-term loan.

Potential to borrow more

You may be able to borrow more with a long-term loan than you can with a short-term loan, increasing your financial power today.

CONS of long-term personal loans👎

Pay more interest

Interest rates tend to be higher with long-term loans than short-term loans. By extending the repayment period, you’ll also pay more interest overall.

Harder to find

Not as many lenders offer long-term loans as offer short-term loans. That means you’ll have fewer options to choose from.

Stricter approval process

Once you find a lender willing to offer one, long-term personal loans are generally harder to qualify for. The exact thresholds for your credit score and debt-to-income (DTI) ratio will depend on the lender.

When Is It a Good Idea To Get a Long-Term Personal Loan?

Personal loans can be used in many ways, but some needs are more urgent than others, like if you need an emergency loan. Long-term personal loans can make sense if you absolutely need the funds but will struggle with the monthly payment.

Remember, regardless of the type of loan you take out, failing to repay it will have negative consequences and will hurt your credit score. Long-term personal loans are better than struggling to repay a short-term loan with a higher payment – even though they’re more expensive in the long run.

When To Avoid a Long-Term Personal Loan

A lender will run a hard check on your credit report and review your credit score to assess your eligibility for a long-term personal loan. If your credit score falls below 650, you likely won’t be approved for a loan.

The shorter your loan term, the less you’ll pay to borrow the money overall. So, if you can afford to make the monthly payments on a short-term personal loan, it’s almost always going to be the better option.

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Where Can You Find Long-Term Personal Loans?

Some banks, credit unions and online lenders offer long-term personal loans. When shopping for lenders, compare interest rates, loan terms and each lender’s qualification requirements. Consider getting prequalified from lenders before applying for a loan if you can. (FYI: Prequalifications won’t hurt your credit score.)

How Do You Apply for a Long-Term Personal Loan?

To apply for a long-term personal loan, you’ll need to:

  • Know how much you want to borrow: Figure out how much you need for your specific situation. This could be the total debt you wish to consolidate or the final cost of a medical procedure. While doing your calculations, include any associated fees such as loan processing or the cost to complete your application.
  • Compare loan options: Research and compare lenders and even alternatives to long-term loans.
  • Get prepared: The lender will require proof of identity and income.
  • Apply for the loan: Follow all required steps to complete the application process successfully.
  • Complete the process: Once you’re approved, you’ll sign your loan agreement. This will include your account information, your repayment information and your lender’s contact information. Store your documents in a safe place for future reference.
  • Schedule your first payment: If you can afford it, set up autopay to avoid missing a payment.

Alternatives to Long-Term Personal Loans

Long-term personal loans are uncommon because borrowers and lenders both take on increased risk. Fortunately, there are alternatives to long-term personal loans.

Short-term personal loans

Short-term personal loans offer all the financial flexibility of a long-term personal loan and have loan terms ranging from 12 months to 60 months. Some lenders also can approve your application within 24 hours.

Home equity loans

If you are a homeowner, consider a home equity loan versus a personal loan. With a home equity loan, you can tap into the equity in your home to withdraw cash, and you’ll have an extended time to repay the loan.

You will receive a lump sum payment. And depending on the loan’s terms, the loan repayment period can last as long as 5 – 20 years. In some instances, you can stretch repayment up to 30 years.


A home equity line of credit (HELOC) works much like a credit card because it operates as a revolving line of credit. Like a home equity loan, your home acts as collateral for the loan. However, a HELOC may offer a lower interest rate. This could make it a better option than a long-term personal loan. Depending on how you use the funds, you may even qualify for some tax benefits.

Credit cards

Some credit card companies offer competitive interest rates and promotional APR offers. Using a credit card wisely can be one way to meet your financial needs without going into long-term debt. But, remember, promotional APR offers have time limitations. So be sure to pay off the balance before the promotional period ends. If not, you could be stuck with a higher interest rate than what a personal loan would have offered.

Final Thoughts on Long-Term Personal Loans

Long-term personal loans are an option for consolidating debt and borrowing large sums of cash. The tradeoff is that you’ll likely have a harder time finding lenders willing to offer one, and you’ll pay more in interest.

If you can afford the monthly payment, a short-term loan can save you thousands of dollars over the life of the loan.

Get Prequalified for Loans from $2,000 to $45,000

Rocket LoansSM offers personal loans from $2,000 – $45,000. From debt consolidation to unexpected expenses, we’ve got you covered.

Checking your options won’t affect your credit score.

The Short Version

  • Long-term personal loans generally refer to loans with a repayment term of longer than five years (60 months)
  • Pros of long-term personal loans include lower monthly payments, the ability to borrow more and better interest rates than you’ll get with most credit cards
  • Cons of long-term personal loans include paying more over the life of the loan in interest, difficulty finding lenders who offer them and stricter qualification standards
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