5-year loans
Compare 5-year loans today
- Spreading the cost of a loan over five years could make repayments more manageable
- Search for the right 5-year loan, before you apply
- Comparing with us won’t affect your credit score
How does a 5-year loan work?
A 5-year loan lets you borrow a fixed amount of money and pay it back in monthly instalments over five years. You’ll be charged interest on the loan, so you’ll repay more than you originally borrowed.
Spread your repayments over five years, and it can be more affordable than borrowing the same sum over a shorter period. But it could cost you more overall, as you’ll pay interest for longer.
Use our loan calculator to see what your monthly repayment on a 5-year loan could be and how much interest you’ll pay over the length of the loan.
What types of 5-year loans are available?
If you’re considering a loan, here are the different types of 5-year loan to look at:
5-year personal loan
Also known as an unsecured loan, which means you don’t need to put up an asset, such as your home or car, as security. You can typically borrow up to £25,000 with a personal loan (although you can compare personal loans up to £50,000 with Compare the Market).
5-year secured loan
Commonly called a homeowner loan, you use your property as security if you want to borrow. If you don’t keep up with your loan repayments, the lender can repossess and sell your home to get its money back.
Typically, you can borrow up to £150,000 with a secured loan. This type of loan tends to offer a lower interest rate because there’s less risk for the lender.
5-year guarantor loan
A guarantor loan is taken out with someone who agrees to pay back the loan if you can’t. A guarantor is usually someone with a good credit record – often a close family member or friend. This type of loan could be a useful option if you have a poor credit score or no credit history.
A guarantor loan is usually an unsecured loan but can also be a secured loan.
You can’t compare guarantor loans with Compare the Market.
5-year debt consolidation loan
Bring together existing debts with different lenders by combining them into one new, manageable loan.
A debt consolidation loan can have a lower interest rate than your existing debts, making your monthly payments cheaper. But if your new consolidation loan has a longer term than your previous debt, you’ll pay more in interest. This means your debt could end up costing you more overall.
5-year peer-to-peer (P2P) loan
A P2P loan sees you borrow money from an individual or group, rather than a bank or building society. A specialist P2P website will match you with those willing to lend, then act as intermediary to process the payments.
You could find a P2P loan at a lower rate than loans on offer from traditional lenders, although the rate will largely depend on your credit history.
You can’t compare peer-to-peer loans with Compare the Market.
Read our guide on the different types of loans available.
What can I use a 5-year loan for?
People often use 5-year loans to pay for:
- A wedding
- Home improvements
- Buying a car
- To cover unexpected expenses
- Debt consolidation.
Why choose a 5-year loan?
A longer-term loan can be appealing for several reasons. The main advantages of a 5-year loan include:
- Lower repayments – your borrowing could be more affordable than with a short-term loan because the repayments are typically lower.
- Cheaper interest rates – this is particularly the case if you choose a 5-year secured loan, because the lender also has your asset as security to reduce the risk of their investment in you.
- Flexibility – depending on your credit rating, you could borrow up to £50,000 with an unsecured loan and spend it on whatever you choose (although there are some restrictions on what you can use a loan for).
What are the disadvantages of a 5-year loan?
A 5-year loan won’t be suitable for everyone. The disadvantages include:
- You’ll pay more interest – borrow the same sum over one, two or five years and a 5-year loan is likely to be more expensive overall. The longer the term, the more interest you pay.
- You’re committed for a long period – if circumstances change and you can’t meet your monthly repayments, it could damage your credit score and affect your chances of future credit. You could even lose your home if you’ve taken out a secured loan.
How much does a 5-year loan cost?
To avoid overstretching your finances, only borrow what you can comfortably afford to pay back each month.
Here’s how much a 5-year personal loan for different amounts could cost overall:
| Initial borrowing | APR | Monthly repayments | Total repaid |
| £10,000 | 6% | £192.59 | £11,555.39 |
| £15,000 | 6% | £288.88 | £17,333.08 |
| £20,000 | 6% | £385.18 | £23,110.78 |
| £25,000 | 6% | £481.47 | £28,888.47 |
Our loan calculator can help you see what your monthly loan repayments might be and how much a loan could cost you overall.
How can I find a 5-year loan?
You can compare 5-year loans at Compare the Market. We’ll show you which loans you’re most likely to be accepted for, without any impact on your credit score.
Compare loansWhy use Compare the Market?
| Find out which loans you could be eligible for without any impact on your credit score | Check the loan rates you could get before you apply | We compare loans from a range of trusted providers |
Compare the Market Limited acts as a credit broker, not a lender. To apply you must be a UK resident and aged 18 or over. Credit is subject to status and eligibility.
Frequently asked questions
Can I get a 5-year loan with bad credit?
Yes, it may be possible to get a 5-year loan with bad credit, but you might have to pay a higher rate of interest. Bad credit loans are also likely to have a limit on how much you can borrow and for how long.
If you can improve your credit score, you could increase your chances of being accepted for a loan.
How long does it take to be approved for a 5-year loan?
If you apply for a personal loan online, you’ll usually receive a quick decision from the lender. If your loan application is approved, the money could be in your bank account within days (or even hours).
A secured loan application takes longer to process – around three to four weeks. That’s because more paperwork is involved to secure the loan against an asset.
