07 Jul 2021 | 5 min read
Most people think of a personal loan is known as a short-term financing method which is typically ranging from 2 years to 7 years of repayment tenure. Borrowers use these versatile loans to pay their various financial needs like to fund home remodels, pay your medical expenses, or even consolidate credit card debt.
But do you know the fact that long-term personal loans also exist as short-term personal loans? Here’s what a borrower should know about this type of loan, eligibility check, repayment tenure including what will be the right option for you.
In common words, a long-term personal loan has a maintained repayment term which is lasting up to 5 years. Many personal loan providers repayment terms between 5 years and 7 years, but some lenders offer terms as long as 12 years.
Long-term loans assist in addressing important financial needs such as marriage, home construction, and business start-up. It has become one of the most popular financial instruments since banks provide a variety of options to assist you to select the best loan for your needs. The following is a rundown of different long-term loans:
This form of loan is used to pay for certain courses, such as engineering or medicine, as well as to study abroad. The loan term ranges from 3 years to 30 years. The loan amount will also be determined by the tuition cost and any other expenses that may arise during the educational process. Frequently, the applicant's children complete the course and begin repaying the EMIs after landing a job.
A car loan is the most common financial instrument because it is one of the easiest to obtain. Banks have simplified the process of applying for and receiving a car loan. Car loans are the ideal way to buy a new or used car since they provide easy and rapid financing to the buyer. The loan term ranges from 2 years to 7 years. Because of the high level of competition in the market, you can negotiate a lower interest rate with your preferred bank based on your income and other liabilities.
This sort of loan has a long repayment period of more than 3 years and can have a cap on the amount borrowed. Because a personal loan is an unsecured loan, the rate of interest is higher. A personal loan does not require collateral from the bank. As a result, there's a good risk you'll miss a payment. When money is needed to meet a financial contingency or an emergency, a personal loan can help instantly.
Long-term loans are borrowings that are arranged and repaid over a long period of time. The following are some of the most important characteristics of long-term loans:
Availing of a long-term loan when you have a specific financial need is a wise decision. The following are some of the advantages of taking out a long-term loan:
In the case of long-term loans, the interest rate can be fixed or variable. Depending on the type of loan, interest rates range from 8.90% to 12%. Before applying to a certain lender, it is necessary to compare interest rates from other banks.
While processing a long-term loan, banks levy some fees. The following are some of the charges applied on it:
Varies from Rs. 700 to Rs. 2500
Varies from 2% to 6% of the outstanding principal
Overdue EMI Interest
Around 2% per month
Rs.500 per instance
Legal and other incidental charges
Actual and non-refundable
Amortization schedule change
For long-term loans, different banks have established varied eligibility conditions. The general eligibility criteria for long-term employment vary depending on the type of long-term employment sought:
Any long-term loan requires the submission of certain documentation to the lending bank for approval. The list of these documents varies depending on the loan institution. A copy of the following documents is required by most banks.
To meet the diverse needs of customers, all major banks and financial institutions provide long-term loans. This form of loan is offered by a number of banks, including:
In this blog, you may get information on long-term loans that have a longer repayment period or tenure. A loan's repayment period can last anywhere from a year to 30 years. Long-term loans are defined as those that are repaid over a period of more than 3 years. You can check the best banks in India offering long-term personal loans to borrowers. The majority of long-term loans are constructed in such a way that they can be used by borrowers from various socioeconomic backgrounds. You can also contact Afinoz.com for any other financial advice.