What are the benefits of long-term loans?
Some advantages include:
- Flexibility. You can find a long-term loan ranging between £1,000 to £100,000, over a period of time to pay back that suits you.
- The possibility of lower interest rates than short-term loans. Payday lenders, for example, can have interest rates exceeding 1,000%. Just check the APR to see what interest rates have been offered to at least 51% of successful applicants to see how long-term loans compare.
- A longer-term loan, because you are paying back over an extended period, can mean lower monthly payments and can therefore be more affordable, although you may pay back more overall.
See the impact of paying back over a longer period in this example:
||Cost of loan
Here you can see that although the monthly payments are much more affordable, the overall cost of the loan increases when it is paid back over a longer time. So you have to choose the size and length of loan that is affordable for you.
If you do opt for a long-term loan, make sure you fully understand the terms and can afford the repayments.