A long term personal loan is ideal when you need to finance large purchases.
A long term personal loan is a loan that has a loan term of between five to seven years. This is a considerably longer amount of time, so they’re often used for big purchases such as a car, boat, complicated surgery or a huge wedding.
Something to be careful of when it comes to long term personal loans are you repayments. SInce you’re extending the loan for as long as you can, the interest payments will be higher than a personal loan of half that loan term. Depending on your personal situation, this could be good or bad. It may be a positive thing if your cash flow will remain low for period of time, and you don’t intend on building anymore debt. If you’re continually adding more debt.
ANZ Personal Loan Offer
A Personal Loan from ANZ can help you pay for a car, a holiday or some home renovations.
- Interest Rate From: 13.95% p.a.
- Comparison Rate: 14.81% p.a.
- Interest Rate Type: Fixed
- Application Fee: $150
- Minimum Loan Term: 1 year
- Maximum Loan Term: 7 year
- Minimum Loan Amount: $5,000
- Maximum Loan Amount: $50,000
Long term personal loan comparison
How does a long term personal loan work?
Lenders who offer long terms personal loans often require that applicants don't have any negative listings on their credit file. While you can get a long term personal loan even if you suffer from poor credit, you can expect to pay a higher interest rate. How much you can borrow depends on various factors like your earnings and expenditure, although if you're a student looking for a long term student loan the parameters change.
Borrowers will have a choice between fixed and variable rates with their long term personal loan. There are benefits to both, such as fixed interest rates allowing borrowers to know exactly how much they have to pay each month, and opting between the two primarily boils down to personal preferences based on individual circumstances.
How you can compare personal loans that have a longer loan term
- What is the interest rate of the loan?
This defines what your repayments will be over the course of the loan. It’s important that you take this into account by using a repayment calculator to determine whether you can make the repayments.
- Is the loan secured or unsecured?
Secured loans are ones that require you to provide some kind of collateral, and these tend to attract lower interest rates in comparison to unsecured loans. If you're buying a car, the car can serve as collateral, or you can use an asset you already own, such as your car or equity in your home, as collateral for a loan.
- What is the loan amount you'll be borrowing?
How much you can borrow depends on various factors like what you need the loan for, your ability to provide suitable security, your annual earnings and your monthly expenditure.
- Do you have multiple repayment options?
Repayment flexibility comes in the form of you being able to choose between weekly, fortnightly, and monthly repayments. If you take a variable rate loan look for one that allows you to make extra repayments without incurring any penalties, as this allows you to pay your loan off sooner. In such a scenario, you may also want to look for a loan that offers a redraw facility.
- What are the other fees and charges on the loan?
Other fees and charges apply. These fees are listed per lender for you to check.
- Do you have a range of loan terms available?
As the term suggests, long term personal loans usually take 5-7 years to pay off.
Read more: Unsecured personal loan comparisons
The good and not-so-good
- These loans have flexibility.
Depending on the loan you choose, you can use the loan amount for just about any reason.
- They have a relatively easier application.
If your application is successful, most financial institutions can offer the funds to you within 24 hours if you have an established account in Australia.
- There could be no collateral needed
You can get a long term personal loan even if you can't provide any kind of collateral. While unsecured loans tend to attract higher interest rates than their secured counterparts, they enable people without assets to borrow.
- You could use the finance for a huge expenses.
Long term personal loans allow you to finance the more expensive things in life that you wouldn't normally be able to finance.
- You might pay more in interest. The interest rate can serve as a negative in different scenarios. For starters, if you're looking for an unsecured loan, expect to pay a higher interest rate. In addition, leading institutions normally don't offer the most competitive interest rates.
- Keep you in debt longer. Having longer repayment period makes you pay off the entire loan longer.
- Tendency to incur another debt. Since consolidating your debt can free you from bulk payments, you might be thinking of obtaining another one.
Things to avoid about long term personal loans
- Excessive debt. While taking out a long term personal loan might seem like a good idea at the onset, but it can lead you debt that might be difficult to repay, depending on your circumstances. Try to make a repayment plan ahead of time and account for unexpected expenses in your budget.
- Fees and charges. Make sure you go through all the fine print and find out exactly what you have to pay in terms of fees and charges. These can come in the form of application fees, insurance costs, arrangement fees, early repayment fees, settlement charges, and late charges.
- Bad credit risks. Obtaining a loan to consolidate all your loans can damage your credit rating should you fail to pay the required repayments. Plan well or you will be trapped in perpetual debt.
- Tendency to splurge. Long term personal loans normally set a minimum loanable amount so you expect to get a larger chunk. What does this entail? You can be tempted to use it all up and buy more than what you need.
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How to apply for long term personal loans?
Applying for a long term personal loan is rather straightforward, and you can start by comparing your options. Go through the options on this page and once you find a suitable product, click on it to go to the provider's website. As part of the application process most lenders who provide such loans require that you meet a few basic eligibility criteria, which usually include you being an Australian resident and being over the age of 18.
As part of the application process, prepare to provide details about your employment and your earnings. If you're taking a secured loan you'll have to provide documents to prove ownership of the collateral in question.