Finance Long-term Personal Loan, Personal Loan

Should You Take A Long-term Personal Loan Or Not?

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Personal loans are financial instruments that offer funds to individuals without pledging any security to finance their vacations, education fees, medical emergency, home renovation, and many more. Personal loans do not come with any predetermined list of activities for which they can be used. As we all know that personal loans are unsecured loans hence it is more popular than any other loans due to the nonrequirement of any type of collateral. Personal loan tenure can be classified into two types: long-term and short-term personal loans. 

Read this article to know what is the difference between these two types of personal loans. Which is the best or suitable for you- long-term and short-term personal loans. In which situation you have to choose which one of them.

What is a Long Term Personal Loan?

Unsecured loans with longer repayment tenure, i.e. more than three years, are known as Long-Term Personal loans. These loans are typically associated with high-value expenditures such as higher education, home renovation, medical emergencies, wedding, dream vacations for the family, debt consolidation, etc. The repayment tenure for the long-term personal loan is of more than 3 years. Here are listed below some features for the loan.

The longer repayment tenure has various features associated with it:

  1. Eligibility criteria: The eligibility criteria for a long-term personal loan is simple. It includes the age of the applicant, income, and credit score.
  2. Documentation: Long-term loan requires applicants to submit some documentation like proof of ID, address, income, etc.
  3. Application: One can apply for long-term personal finance online through the lender’s website or app.
  4. Interest rate: The personal loan interest rate offered varies between 11.99% to 36%.

Now that we have a fair idea of a long-term personal loan let us look at the pros and cons to decide whether open should opt for long-term personal loan finance.

Pros of Long-term Personal loan

Long-term personal loan finance comes with various benefits. Some of the benefits which are listed below have a look at that:

Reduces repayment burden: As the borrowers have a longer duration to repay the loan, the EMI also reduces. It decreases the applicant’s financial burden, providing them enough time to plan the repayment and not undergo excess financial pressure. You can use the EMI calculator to calculate your monthly payment. This calculator is freely available on the lender’s website for the calculation of the EMI.

Improves loan eligibility: Before approving the loan, the lender checks the applicant’s income to be sure that they can repay the loan on time. With a longer duration, the chance of loan eligibility increases, as the EMI reduces. If the applicant looks suitable to pay back the amount on time the lender approves the loan.

Improves credit score: If you have a low credit score, a long-term personal loan is a great option to increase your credit score. With no financial stress and easy repayment option, you can increase your credit score without any hessele. Making consistent repayments without any delay every month can significantly improve your credit score.

Pre-closure of loan: While long-term loans help you save money, you can also opt for the loan’s pre-closure if you have accumulated enough capital for repayment. Some lenders charge a minimal fee for pre-closure, while some also offer it for free. So, you can save a lot of money by opting for a long-term personal loan.

Top-up facility available: With a long-term loan personal loan, you can also enjoy a top-up facility. Through this, you can borrow more money for your expenses without much hassle. Lenders offer the top-up facility to individuals who have paid 12 EMIs. Therefore, if your tenure is longer, you have more chances of being eligible for a top-up loan.

Cons of Long-term personal loan

Though a long-term personal loan is a great option for the borrowers, it comes with a higher risk of default for the lenders. To cover the risk, lenders opt for measures that can act as cons for the borrower. Look at some of the risk included:

  1. Higher Interest rate: The long-term loans usually come with a higher interest rate than secured loans. So, the interest paid overall also increases.
  2. Debt payer for a longer time: The longer your repayment tenure is, the longer you will stay in debt. So, you are required to stay disciplined with your repayment plan.
  3. Decreases eligibility for new loans: The loan eligibility depends on the individual’s repayment capacity. If you already have a loan running, then your chances of getting another loan sanctioned decrease.


We have seen that a long-term personal loan comes with both pros and cons, so the final call of whether or not you should take a long-term loan depends on you. If you are looking for a longer tenure to ensure to avoid making large EMI payments, a long-term personal loan is a great option.

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