Long Term Loans

Here’s why a long-term personal loan is easier to manage:

• Borrow a more significant sum of money: With long-term loans, you can borrow a much more considerable amount of money. So if you need to finance a home improvement project or a new car but do not have adequate funds, a long-term loan might be a good choice.

• Competitive interest rates: With a decent credit history, you might qualify for competitive interest rates on a long-term loan. But remember that keeping the loan term long will accrue you interest for a longer time, resulting in a higher amount of interest payments.

• Affordable instalments: Long-term loans have smaller monthly instalments because they are spread over a more extended period. As a result, repayments are more manageable.

• Repayment flexibility: The repayment period is not usually subject to lenders’ hard and fast rules. You can choose a repayment schedule convenient for you as a borrower.

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Handling a long-term loan can be a big responsibility. It is crucial to sincerely keep up with the loan’s repayments until it’s been paid off. If you’re seeking more clarity about your borrowing decision, ask yourself these questions:

Is this a suitable loan amount for me?

Your first and foremost step should be to evaluate your affordability. Borrow only what you can afford to repay within the repayment period you choose.

Will I be able to commit to the loan term?

Long-term loans are all about dedication and sincerity since you’ll have to commit to the loan for 3-7 years. Assess whether you’ll be able to make all the repayments during the entire loan term.

It would be best to consider accrued interest for the entire loan duration. And thus, you may end up paying more towards interest when you borrow a long-term loan.

Do I need a contingency plan for repayments?

Life is full of surprises, and we should always prepare for them. When committing to a loan with a longer term, it is imperative to plan. You can protect your credit rating by being consistent with your loan payments. To avoid defaulting on your loans, you should always have a contingency plan.

What is the purpose of a long-term loan?

A long-term loan is excellent for:

• Home improvements

• Debt consolidation

• Unplanned medical expenses

• Wedding expenses

• Investing in business equipment

Long-term loans come with the advantage of smaller monthly instalments, giving you more control over your outgoings.

So if you’re looking to borrow a sizeable amount with affordable monthly instalments, you can spread the cost of your loan over a longer term.

However, you must understand that a longer-term may accrue a higher interest.

The longer your repayments last, the more interest you are likely to incur, thereby increasing the overall cost of your loan. 

A missed payment may cause your credit score to plummet by a few points. A CCJ may serve you if you consistently fail to make payments or default on your loan. If you have a CCJ, getting credit for your future goals might prove difficult. For this reason, managing your repayments and maintaining a healthy credit score is vital.

Long-term loans are all about patience and perseverance.

To assess a suitable loan option for you, you must evaluate your loan requirements, purpose, and financial circumstances.

While secured loans come at relatively lower interest rates, you will have to pledge your assets to secure the loan.

If you happen to default on the loan, the lender may repossess and sell your assets in the worst-case scenario.

On the other hand, unsecured loans enable you to borrow a sizeable sum of money without any collateral security.

However, you will need a stellar credit history to secure a competitive interest rate on a long-term unsecured loan.

It is, therefore, crucial that you evaluate your needs and finances to best assess your long-term loan options.

You may be able to qualify for a personal loan if you’re self-employed, as long as you’re able to provide proof of stable income.

Since income levels for self-employed people are subject to fluctuation, you could try for a business loan, secured loan, or guarantor loan to improve your chances. 

If your application gets declined by a lender, the best course of action would be to:

• Check the reason behind your rejection 
• Fix solvable issues immediately
• Wait for a few weeks before applying again
• Apply with a guarantor to strengthen your application 

Having a guarantor on your side could be helpful if your credit score is low. If you have a guarantor to co-sign your loan application, both parties take responsibility for the loan’s obligations together. Using a creditworthy guarantor will improve the chances of approval.

Different credit bureaus have other scoring models for credit scores, and different lenders require different credit scores too.

So, there’s no tangible value for the ‘right’ credit score.

Still, it would be best to maintain a score above 670 to qualify for unsecured personal loans. 

If used responsibly, unsecured personal loans can help you build and improve your credit score.

Each timely repayment contributes towards the growth of your credit score.

Make continual repayments within your schedule.

You will be able to fulfil your credit score goals with an unsecured personal loan. 

Suppose you’re looking for a new personal loan with a lower interest rate or higher loan amount.

In that case, you could look into a debt consolidation loan or loan refinancing.

Refinancing your personal loan will enable you to explore more competitive offers in the market. 

Taking the time to analyse your contract will let you know whether or not there are any settlement fees if you plan on repaying your loan early. As long as your lender does not charge you an early repayment fee, you can quickly pay off your loan before the end of the repayment term.

With LoanTube, you can borrow up to £35,000 over 12-84 months.