Advantages of taking out a long-term personal loan
Larger loan amounts: When you want to borrow a large sum of money, perhaps for a home improvement project or to consolidate debt, lenders may give you the option of a longer term loan to pay off the loan.
Lower monthly payments: Longer term loans will have lower monthly payments than shorter term loans. However, the advantage of having a longer term may be offset by a higher interest rate. Pick a monthly payment you can afford, but consider both the interest rate and the loan term when applying for a loan.
Disadvantages of taking out a long-term personal loan
Higher interest rates: Lenders may charge higher rates for longer-term loans because they are considered riskier. The longer you have to repay a loan, the greater the chance that your financial situation will change in a way that prevents you from repaying the loan as agreed.
More interest: Unless you prepay the loan, you will pay more interest over the life of the loan than you would on a shorter term loan.
Your finances could change: Your financial situation is likely to change over the next six to seven years. Having long-term debt means you may have to compromise with future financial decisions.
When to consider a long-term personal loan
A long-term loan is ideal when you are borrowing a large sum of money and need more time to pay it back. You may need to borrow $50,000 for a major home improvementlike a kitchen remodel, and a longer term will lower your monthly payments.
If you want a long-term loan for consolidate multiple debts into one simple payment, consider this first: a debt consolidation loan works best if you get an interest rate on the loan that is lower than the combined interest rate on your existing debt, or if the loan allows you to get rid of debt faster than your current loan. rhythm.
For example, if you know it will take you 10 years to pay off your cards, a seven-year consolidation loan may be a better option. Use our debt consolidation calculator to estimate the potential savings before opting for a loan.
Where to get a long term personal loan
Banks: Discover and Wells Fargo offer loan terms of up to seven years. If you have a good relationship with your bank, you may be eligible for other benefits, such as lower rates or larger loan amounts. Banks generally look for borrowers with good credit (690 FICO or higher).
Personal loans from credit unions tend to have low rates and flexible loan features. Although you must first join the credit union before applying for a loan, most credit unions consider borrowers with fair and bad credit (689 FICO or less).
Online lenders: Only a handful of online lenders offer longer loan terms, including LightStream, SoFi and Upgrade. These lenders cater to borrowers with good credit, with the exception of Upgrade, which accepts borrowers with bad credit (629 FICO or less). Online loans are quick and convenient, and borrowers typically receive funds within days.
Next steps: check long-term personal loan rates
To obtain a long-term personal loan, you must first pre-qualified with some lenders. Pre-qualification gives you a preview of loan offers you could receive, without hurting your credit score.
You can pre-qualify with several lenders on NerdWallet to see if you’re approved for a loan, and if so, at what rate. Once you have pre-selected and compared the offers, you can apply for the loan.