A long-term personal loan is usually executed by a bank or other financial institution or company. When you sign for such a loan, you agree to pay the interest rate mutually agreed upon by you and the lender. You also agree to repay a specific amount on a specific day of each month, depending on how the loan is structured. Applications for these loans can be made online, from a personal interview with a loan officer or other bank agent, or by telephone or smart phone.
Long-Term Personal Loans = Lower Monthly Payments
Of course, the longer your repayment time, the smaller the monthly payments will be. But then, you will be paying out more in interest because of the extended time period. Interest rates will vary based on the specific amount of time to pay off the long-term personal loan, the amount borrowed, and the financial status of the applicant. You can find free calculators online that will help you figure the final cost of both short-term and long-term loans with regard to monthly payment amounts and interest rates charged.
Secured Long-Term Loans vs. Unsecured Long-Term Loans
Interest rates and repayment terms will vary widely among secured and unsecured long-term personal loans. Loan durations can extend from 5-25 years depending on the amount borrowed.
Secured Loans - With property offered as collateral or security, loans may be larger and interest rates may be lower. Collateral can be in the form of a house, other real estate, stocks or bonds, even a late model car. Of course, should you default on the loan, the property can be seized by the lender and sold to cover the cost of the loan.
Unsecured Loans - These loans are based solely on your signature and the promise to repay. Since this a risky venture, loan amounts may not be so high and interest rates will be higher than usual.
Fixed Rate Loans vs. Adjustable Rate Loans
A fixed rate loan has interest rates fixed at the time of the loan. The rate usually reflects the percentages charged in the financial markets at large at the time of the contract. Once the rate is put on the contract it cannot change. An adjustable or variable rate loan changes periodically to reflect the current market lending rates. So monthly payments can fluctuate, sometimes dramatically. Steer clear of adjustable rate loans unless no other opportunity presents itself.
Some of the Benefits of Long-Term Loans
Depending on how you used the borrowed funds, long-term personal loans can help in a number of ways and the ease with which they can be contracted can be a real financial boost.
Debt Consolidation - Life gets easier when you can roll all your outstanding debts into one payment. Monthly payments will be smaller than the aggregate of the other loans. Interest rates will average out. The payments is due once a month, on the same day, to the same lender.
High-Ticket Items - Long-term personal loans are an excellent way to get a new washer and dryer or some other high-cost merchandise. Long-term loans makes this merchandise affordable.
Readily Available - These loans are easily available, even to folks with poor credit. Having security or collateral provides that much more ease to landing a loan.
Improved Credit - Contracting and repaying long-term personal loans can do wonders for a credit history. Every effort should be made to successfully retire the loan according to the rates and terms in the contract