Long term loans are loans that are paid off over five or more years.
With long term personal loans, spreading the cost over a longer time period makes the repayments lower and easier to afford.
If you need a loan with smaller repayments, then long term loans might be worth considering. But you should be aware that borrowing over a long time is more expensive overall. That’s because you end up paying more in interest with 10 year loans, for example, than you would with 5 year loans. Even if you get a good interest rate from the best long term loans, the fact that you’re borrowing for longer means you’ll pay more overall.
If you want to apply for a long term loan, our comparison table above is a good place to start.
When it comes to long term loans, direct lenders or banks may be happy to lend to you, depending on your circumstances.
How do long term loans work?
Most personal loans are paid off gradually, over a short period of between one and five years. But longer loans take much longer to pay off. You might find a 10 year loan or even longer.
Take a look at some loans over 10 years and some loans over shorter periods to see what you can afford. Our loan calculator can help you work this out.
Is a long term loan right for me?
Taking out a long term loan is a big decision and commitment. You’ll be making repayments for a long time and it’s hard to predict how your finances will be in 10 years’ time. What if you change jobs? What if you lose your job? What if your marriage breaks down? Nobody knows what their financial situation will be in the future, as we don’t have a crystal ball.
The best thing you can do is research longer loans thoroughly so you fully understand the advantages and disadvantages of taking one out.
What are the advantages of taking out long term personal loans?
The advantages of taking out long term loans include:
Larger loan amounts available: Banks will lend more money if you’re repaying it over a longer time period.
Competitive interest rates: With a long term loans, low interest rates are common. The interest rate is the amount you pay the bank for lending you the money.
Affordable monthly payments: With a long term loan, you spread your loan over a longer time period, so it makes each monthly repayment lower.
Many lenders to choose from: Lots of banks offer long term loans.
Flexibility: You can choose how much to borrow over whatever time period suits you.
What are the disadvantages of taking out long term loans?
There are also disadvantages to taking out 10 year loans, or even longer loans.
For example, long term loans have a higher borrowing cost. Even if the interest rate is low, the longer the loan period, the more you’ll pay in interest overall.
It can also be harder to get approval for long term loans in the UK.
And you might find that you’ll be charged for early repayments. Watch out for other fees and charges too.
How to choose the best long term loan
There are three main things you need to think about when you’re about to apply for a long term loan:
Work out how much you need to borrow
Choose how long you’re going to pay it back over
Compare interest rates to find cheap long term loans which suit your needs.
Once you know how much you’d like to borrow and how long you need to pay it back, you can start doing a proper comparison. For example, you might decide you want a £25,000 loan over 10 years or a £15,000 loan over 5 years.
The comparison table at the top of this page shows longer loans in the UK that can be paid back over four years or more. If you want to apply for a long term loan, the table gives you an easy way to compare rates before you choose one to apply for. Looking for long term loans online is the best way to do your research. You can cover lots of different lenders and banks without having to traipse around branches.
There are also a few other things to consider when looking at a loan over 10 years, or other longer-term loans. These include:
Whether the loan’s secured or unsecured: It’s not uncommon for long term loans to be secured against your property. With long term secured loans, if you don’t keep up repayments on your debt, the bank could sell your house to get its money back. That’s something to be aware of as you could risk losing your home if you found yourself unable to repay your long term loan. It can be hard to find a long unsecured loan if you’re borrowing for more than five years.
The type of interest rate: Most personal loans fix the rate of interest, but sometimes long term loans in the UK have variable rates. This means the rate can change during your loan, so check before you apply. You’d need to make sure you were prepared for your monthly repayments to go up and down with a variable loan. This can be tricky from a budgeting perspective. There’s more on interest rates below.
Whether you can repay it early: 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 and help you clear your debts quicker if your situation changes.
The lender’s borrowing rules: Don’t forget to check the bank’s application guidelines before you apply.
What can I take out a long term loan for?
Most people who are interested in a 10 year loan even longer loans are looking to finance long term projects or a big expense.
You might use a long term bank loan to purchase property, pay for a wedding or do home improvements. Some people look for long term car loans or long term debt consolidation loans. These are just some of the reasons why people are interested in a £25000 loan or an even larger loan, such as a £30k loan over 10 years or £50000 loan over 10 years. You could even get a £40,000 loan over 10 years if you were planning a particularly large purchase or project.
But remember that a long term personal loan shouldn’t be used for your business. You need to look specifically at long term business loans if the money is for your company.
Long term interest rates
When you take out any kind of loan, there are two types of interest rates to look out for.
A fixed interest rate means the interest rate stays the same throughout your term, even if market interest rates change. This makes it easier to plan your repayments. You won’t have to pay any more if interest rates rise. But remember that you also won’t benefit from lower repayments if interest rates go down.
A variable interest rate means the lender can increase or decrease the interest rate while you are paying off your loan off. Your repayments would go up if market interest rates rose, but decrease if market interest rates went down. This can make it difficult to plan your finances. But if interest rates go down, you’ll benefit from lower repayments.
Long term loans for bad credit
You can still get long loans if you have a bad credit history. But you should be aware that long term loans for bad credit usually have higher interest rates.
Long term loans for poor credit can be a good way to consolidate existing debts. Long term debt consolidation loans could reduce your repayments. They can also be easier to manage than paying lots of different lenders.
With long term loans for bad credit, lenders might look more closely at your credit rating. They’re more likely to want to secure your loan against your home and you’ll need to think about whether you’re prepared to do this. But it’s not uncommon with long term loans generally, and not every loan is secured.
If you’ve got bad credit history and are interested in long term loans, no guarantor could be problematic. Many lenders will want you to have a guarantor, as it makes it less risky for them to lend to you.
For long term loans, no credit check isn’t an option you’ll often have. Most lenders will want to do a credit check if they’re lending to you over a long time period. Although you can get loans without a guarantor, these don’t tend to be larger, long-term loans.