Long Term Personal Loans

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What is a Long Term Personal Loan?

A long term personal loan allows the borrower to opt for longer loan tenure such as 3 to 7 years. A long tenure personal loan runs for a couple of years. The EMI amount of the loan will be lesser than short term loans. There are many benefits of choosing a long term personal loan but at the same time, the cons should not be overlooked. Here are the pros and cons of long term personal loans.

Pros of Long-Term Personal Loans

1.Enhances Loan Eligibility

When you opt for longer loan tenure, it will help you to get a better loan amount. A longer tenure minimises the EMI amount so the repayment becomes easy. Before sanctioning any kind of loan, lenders do check if the borrower is able to pay off the loan easily. In the cases of low EMI amount, the lenders easily sanction a higher loan amount as the chances of defaulting become less.

2.Keeps the EMI Amount Smaller

As mentioned above, longer tenures minimise the EMI amount, it becomes easy for the borrower to pay off the loan. One can easily pay off the loan without making huge alterations in the monthly budget. Before applying for a personal loan check your EMI amount in personal loan EMI calculator.

3.Helps to Build Credit Score

If you want to use your personal loan to improve your credit score, then a long term personal loan works best for you. The improvement of credit score needs a quite long span of time, so taking a long term personal loan and serving the loan with discipline makes your credit score improve.

4.Being Eligible for Top-Up Loans

A longer loan makes you eligible for a top-up loan as long as the tenure runs. A personal loan borrower becomes eligible for top-up loans after paying EMI of the first 12 months. So if your loan term is for 5 years, you can become eligible for a top-up loan for 4 years. But in case of short tenure loans, you lose the opportunity.

Cons of Long Term Personal Loans

1.Paying High Interest

Interest rate is calculated on reducing balance principal.  Due to loan  amortization  method  during initial months EMI’s major portion goes towards interest than principal. This means that if you  want  top-up or  prepay  your loan than your principal amount will  not be reduced significantly and you may end up paying higher interest rates 

2.Being Debt-Burdened for Longer

A long term personal loan will keep you under the debt for a long time frame. Being under debt for a long time may make you feel the debt-burdened. You will always need to be disciplined with your financial responsibilities for a long span of time.

3.Lowers Eligibility for New Loans

The loan eligibility of a person is calculated on the repayment capacity. As long as you service a loan, your loan eligibility for new loans is lessened as you have fixed obligation of your ongoing loan. The lenders do check that the total payable of every month should not be more than 50% of your net monthly income.

FundsTiger can help you getting your Long term Personal Loans. Please find the top 6 Long Term Personal Loan lending banks and NBFCs.

FundsTiger is an Online Lending Marketplace where you can search for and avail Fast and Easy loans from almost all the leading Banks and NBFCs. You can Apply for Loans with Best possible Rates of Interest and terms for Personal Loan, Business Loan , Home Loan and Car Refinance Loan.