Understanding Long Term Personal Loan

6 min read

What are Personal Loans?

Loans provided by the Banks and NBFCs to the eligible borrowers without any usage limitations or Restrictions are Personal Loans. Whether it be a medical emergency or any sudden financial need, personal loans are always there to help you financially. These loans are unsecured making it convenient for the people to avail it. 

Though it has many advantages and benefits, people do not consider a personal loan for the long term. You must be thinking why is this so? The answer is that many people are not even aware of a personal loan can be taken for the long term. There is a typical mindset persisting that personal loans are only short term loans and it cannot be availed for a longer period. 

What is a Long Term Personal Loan?

Personal Loans with a tenure of more than 3 years are usually called as a long-term personal loan. Many of the Banks and NBFCs provide personal loans for a long period which is of 5 years and also can be even more. 

Generally, the personal loan comes with a higher interest rate as compared to secured loans, and this is the reason people hesitate to go for a long term personal loan. Paying high interest for a longer-term may end up paying more on the interest. 

Consider these while going for a long term personal loan

  • Have a clear idea of your loan amount requirement, don’t opt for more without calculating your requirements.
  • Before applying for a loan, calculate your Personal Loan EMI to figure out your monthly cost.
  • Remember for a long-term personal loan, you may need to put the collateral. 
  • Interest rate

Purposes to avail a Long-term Personal Loan

  • To pay medical and health-related bills.
  • Automobile Costs
  • Debt Consolidation
  • To bear the cost of loan Refinance, which could lower the rate of interest.
  • For higher education
  • For business expansion/cash flow
  • For home construction/renovation

Pros & Cons of Long-term Personal Loan


  • If you take a personal loan and make timely repayments against it, the credit bureaus may consider it good debt.
  • Repaying it on time will increase your Credit Score.
  • Whether consolidating or refinancing your debt with a long term personal loan, it may come at a lower interest rate hence you need to pay lower EMI monthly.
  • Going for a long term personal loan reduces your financial burden as you need to repay it for a longer tenure.
  • The monthly payments may be smaller if you opt for a longer-term, but you must also consider the amount the interest rate.


  • Along with repayment term for a personal loan means you’ll be paying much more on the interest over the time as compared to a shorter-term loan.
  • If you want to close your long term personal loan account early, you may be charged some closure fees against it.
  • A long term personal loan means you need to accommodate for the debt for a much longer time than for a shorter-term loan.

Are Long-term Personal Loans Expensive?

You can’t come to the conclusion that a long term personal loan is expensive or not. The cost of your loan always depends on two factors

  • The amount you are borrowing
  • The repayment tenure

A long-term personal loan can act as a great financial credit product when used wisely. Go for it only after considering other options too. Remember going for a long term loan is a big financial commitment, when not taken care of properly can lead to serious consequences in the future.

Always think wisely and then opt for a loan term personal loan. You always have options to pre-close it, making it worth it at the time of need. 

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