July 26, 2023
- Olsen Breet
- June 15, 2021
There are different types of borrowing facilities available. A long term loan is one of them. It can be easily predicted that money can be borrowed for a lengthy period in the term ‘long’.
It will ease the borrower at once because, with short term loans, there is no question of a lengthy repayment period.
Moreover, in the UK, long term loans in minutes can be applicable. For this reason, in comparison with a short term loan, one can focus attention on the long term. But this type of loan applies several important conditions to a borrower.
For this reason, before applying for such a loan, let us know what it is all about.
What is long term loan?
Apart from a longer repayment period, it is a type of loan that provides the facility to borrow a huge amount of money.
Moreover, by availing of this loan, a borrower can find the ease of repayment as he does not need to pay a big amount every month. In that case, a long term loan is affordable to everyone.
However, it is also undeniable that while repaying for a long time at the terminal stage, one can discover that the borrower has already paid extra than the amount he borrowed.
This is due to the long repayment period, which charged more interest on the outstanding. Do not forget about this flaw of a long term loan.
Therefore, sending the application, make sure you have compared enough the rate chart with other lenders.
As there are many long term loans providers such as direct lenders in the UK, offer exciting rates which will lower down the entire repaid amount.
A Loan that will perfect for me:
As mentioned, there are different types of loan available. You need to choose which one will suit you the best. If you start exploring the lending market, certainly you can find several types of loan.
How do you know which one will be the best option for you? Simply ask few questions to yourself, such as –
- What will be the desirable repayment period?
- How long you want to run the repayment?
- What will be the borrowing amount?
- What will be the mode of payment?
- How much financial stability do you possess to complete the outstanding amount?
However, after analysing these questions, if you find out that a longer repayment period will be just perfect, you can apply for long-term loans.
On the other hand, if you think you don’t need to borrow a huge amount of money, you can easily opt for a short-term loan with a short repayment period.
Don’t fall into dilemma:
As long-term loans are generally associated with securities, borrowers often suffer in a dilemma even after filling up the application form.
This is because of the insecurity of getting back the property kept under the partial authorisation of the lender. Don’t fall into a dilemma.
It is a myth that after borrowing long term secured loan, the borrower loses hold of his property.
Actually, a good borrower with timely repayment always gets back his property. Remember, a long term loan means being committed to the lender.
Therefore, in every circumstance, the repayment should be made whatever the financial condition you are facing. Whether you left the job or settle down in a new place, or hit by financial turmoil, nothing can resist the repayment, even for one month.
For this reason, make sure you will be able to possess financial stability for at least the rest of the repayment tenure.
Pros of borrowing long term loan:
- Take out a huge amount at a time: One of the most attractive benefits of applying for this loan is sanctioning a huge loan amount at a time. When the need for money is huge, then a personal loan or payday loan will not work.
- Good interest rate: Usually, lenders who sanctioned long-term loans generally don’t charge high-interest rates because of the longer repayment period and keeping belongings as security. At the same time, personal loan fails to offer such exciting rate.
- Ease of repayment – Repaying an entire huge outstanding amount for a long time helps a borrower. Small monthly instalments help in planning the budget for middle-class people.
Cons of borrowing long term loan:
- Consolidated interest rate – Although lenders never apply a high interest rate, they easily apply consolidated interest throughout a long repayment period, which increases the entire borrowing amount. Due to the long repayment period, it is hard to track how much money has been repaid and how much left.
- Lengthy process – Most lending companies usually lengthen the total procedure starting from screening applications ending with the sanctioning amount.
- That is why many borrowers generally avoid long term loan. The main reason for such delay in the process, credit score checking and strong background verification.
- Series of fees – Long term loan is associated with a series of charges. It has been seen that even borrowers are charged due to early repayment, which is of no use. Another thing is, several times, the lending company may ask a borrower to pay for different charges as this loan is supposed to be approved by the various loan officers.
Olsen Breet is our in-house Financial Expert at EasyPolicyLoans, with more than a decade of writing for various finance companies in the UK. He has got this knack for turning even the trickiest money matters into something we can get our heads around. Before he started sharing his wisdom here, Olsen was playing with big numbers and advising on loans at a bank. He graduated from University of Glasgow, grabbing a finance degree before jumping into the deep end of the financial pool. Olsen’s our go-to guy for making sense of market trends and is always ahead of the curve.