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Last updated
November 1st, 2023

What is a long term loan?

Long term loans allow you to pay back the money you borrow over a longer period, making them more affordable each month.

This is typically used to mean a loan with term of longer than a year, but some long term loans last for several years or even decades, such as secured loans or mortgages.

Spreading the cost over a longer period will mean you have lower monthly repayments. However, bear in mind that longer-term loans will be more expensive overall because you’ll end up paying more interest

This is because, even if you get a good interest rate by choosing one of the best long term loans, the fact that you’re borrowing for longer means you’ll pay interest for longer.

You can get long term loans from banks, high street loan companies, or specialist lenders. Whether they will be happy to lend to you depends on their lending criteria and your circumstances and credit score.

Longer-term loans will be more expensive overall because you’ll end up paying more in interest.

Is a long term loan right for me?

Taking out a long term loan is a big decision and commitment. You could be making repayments for several years and it’s hard to predict how your finances will fare from one year to the next.

What if you change jobs? What if you lose your job? Nobody knows what the future holds, so it’s worth bearing this in mind before you commit to a long term loan.

That doesn’t mean a long term loan isn’t right for you, after all people regularly take on mortgages of 25 years or more. But it does mean you need to think carefully about affordability in the future.

The best thing you can do is research longer-term loans thoroughly and make sure you fully understand the advantages and disadvantages of taking one out before going ahead. It’s also important to shop around and find the best possible interest rate to keep costs down.

Pros and cons


Banks will lend more money if you’re repaying it over a longer time period
Low interest rates are common
It reduces your monthly repayments
They're readily available through most banks or building societies


You’ll be locked in for a long time, which could be problematic if your personal circumstances change.
It can be more difficult to be approved for a loan
In some cases you’ll be charged for early repayments

What to consider when taking out a long term loan

Here are few other things to consider when taking out a loan over a long term:

Secured or unsecured

It’s not uncommon for long term loans to be secured against your property or another asset. With these types of loans, if you don’t keep up repayments on your debt, the lender could repossess the asset to sell it to recoup its money.

Fixed or variable interest rate

Many loans fix the rate of interest, which means that your payments will be a set amount each month. However, some loans may have variable rates, which means the rate moves up and down, usually pegged to a financial indicator like the Bank of England base rate. These interest movements mean that your monthly payments also rise and fall, so you need to make sure you are prepared. Check carefully whether a loan is fixed or variable before you apply.

Early repayment options

Most long term loans can be paid back early but some lenders might charge an early repayment fee for doing this. You should check before you apply. The option to pay it back early could save you money in interest and help you clear your debts more quickly if your situation changes.

The lender’s borrowing rules

Check the bank’s application guidelines and lending criteria before you apply. Applying for too many loans and getting rejected can negatively impact your credit score, so use our comparison to see which products you’re likely to be eligible for.

Get a long term loan

See the interest rates you’re eligible for before you apply
Compare long term loans. Consider the loan amount, interest rate, and any fees you'd have to pay
Choose a loan with the lowest interest rate, and a term that's long enough to make the monthly payments affordable
Fill out an application form with your personal and financial details

How much do long term loans cost?

The cost of long-term loans can vary widely depending on several factors, including the type of loan, the lender, your creditworthiness, and the current economic conditions.

The longer the term of your loan, the less you'll pay in monthly repayments, but you'll end up paying more in interest overall.

It comes down to what's more important to you at the time — low monthly payments, or total interest paid.

How the loan term impacts the cost for your loan
An illustration of how the length of your loan term affects your monthly payments and interest paid.

Based on a loan amount of £5,000 at an APR of 3.7%.


How long can I borrow for?

Most personal loans can last for between one and five years, but some lenders offer much longer terms, up to 30 or more years.

Is the interest rate fixed?

Most loans offer fixed interest rates but a few offer variable rates, which could change during your loan term. Variable rates are typically cheaper at the outset, but if you decide to take out a loan with a variable rate, make sure you would still be able to afford your repayments if they went up.

Do I have to be a homeowner to apply for a long term loan?

No, there are plenty of loans where you don’t have to be a homeowner to apply. However, unsecured loans typically have a maximum term of ten years. If you want to borrow over a longer period, you may need to secure the loan against an asset, most often your house.

Can I get a long term loan if I have bad credit?

You may be able to get a long term loan if you have a bad credit score, but you won’t be offered the best rates. Some lenders might rejected you outright if you have a poor credit history. Improving your rating will mean lower interest rates and a wider range of providers prepared to lend to you.

What does APR mean?

It stands for annual percentage rate, and is the total cost of your loan over a year, including the interest charged and any fees that apply to take out the loan. The lower your APR, the lower your monthly payments.

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About the author

Salman Haqqi
Salman Haqqi spent over a decade as a journalist reporting in several countries around the world. Now as a personal finance expert, he helps people make informed financial decisions.

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