How to Decide If Long-Term Personal Loans Are Right for You

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

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Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

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If you’re in a pinch and need cash, where do you turn? Increasingly, American consumers are turning to personal loans.

Outstanding personal loan balances have more than doubled in the past four years, reaching $112 billion in 2017, according to data from TransUnion.

long-term personal loans

Image credit: TransUnion

Long-term personal loans can help you get the money you need when you need it — along with affordable payments.

There’s no rule about which terms are considered long-term personal loans. However, in most cases, a long-term personal loan will have a loan repayment term of five years or longer. Here’s a look at how long-term personal loans can affect your finances.

4 ways long-term personal loans can help your finances

Here are some common reasons you might choose a personal loan with a term of five years or more.

1. You want low monthly payments

If keeping your monthly payments as low as possible is important to you, then long-term personal loans can help.

It all comes down to loan amortization — or the calculation lenders use to set monthly payments. Amortizing a loan means calculating a fixed monthly payment that will cover interest and repay the principal (the original amount you borrowed) over the course of your loan term.

The longer your loan term, the more monthly payments you’ll make. A three-year loan has just 36 payments, for instance, while a five-year loan has 60.

With the principal divided up over more payments, that means a lower monthly minimum. Ultimately, choosing a longer term can free up hundreds of dollars each month. Try out our personal loan calculator and see for yourself how longer terms can lower your monthly payments.

2. You need to borrow a large amount

Another reason to choose a long-term personal loan is if you have to borrow a large amount. You might need a large personal loan to cover major costs for:

  • Consolidating credit card balances and other debts
  • Financing major home repairs or improvements
  • Covering emergency costs or expenses, such as medical bills
  • Paying for major life events, such as a wedding or a divorce

Signing on for a large loan can be intimidating. But choosing a longer loan term can help keep monthly payments manageable.

These examples from SoFi show how personal loan terms can affect monthly costs (assuming a $30,000 loan):

Loan termLowest APRMonthly payment
3 years5.49%$906
5 years6.95%$595
7 years7.95%$467

Choosing a five-year loan instead of a three-year loan will lower your monthly payment by $311. And a seven-year loan will save you $439 per month compared to a three-year loan.

Paying $906 isn’t possible for many borrowers, but $595 or $467 per month might be. By choosing long-term personal loans, you can borrow a large amount and keep your monthly payments manageable.

3. You’re using a personal loan instead of credit cards

Maybe you already have significant credit card debt. Or you’re considering paying for a major expense, such a home repair, with a credit card. In these cases, long-term personal loans are often a better alternative.

Here are a few reasons why personal loans might be a smarter choice than credit cards.

Set payoff date

Your monthly payments are always the same with long-term personal loans, and you know when you’ll get out of debt.

Credit card minimum payments, on the other hand, can stretch out repayment for decades. For instance, it would take you 22 years to pay off a $4,000 credit card balance with a 13.61% APR if you were making minimum payments.

Lower interest charges

No matter what your credit is like, personal loans usually come with lower interest rates than credit cards. That means more of your payments will go toward lowering your principal and paying off your debt instead of interest.

One-time funding

Lastly, credit cards can be tricky because they are a form of revolving credit, which means you can continue borrowing and paying off your balance. Even if you pay off $500 on a credit card, it can be all too easy to turn around and rack up another $500.

A long-term personal loan, on the other hand, provides a one-time payout. By understanding how personal loans work, you can avoid the revolving debt trap of credit cards.

4. You want flexibility to pay less if needed

Of course, there’s no set-in-stone rule that says you have to pay only the monthly minimum on long-term personal loans. In fact, it would be wise to make extra payments to get ahead of interest charges and pay off the debt faster.

For instance, you might think you could manage to pay $900 on a personal loan some months — but not every month. Perhaps you feel more confident about the $600 monthly payment for a five-year term.

You could choose the five-year term and have the flexibility to pay extra when you can. But should a month come along that you need that $300 for something else, you can pay the minimum payment without getting behind on your loan or damaging your credit score.

How long-term personal loans can hurt your finances

Long-term personal loans do have some drawbacks compared to short-term personal loans, however, which loan applicants should consider before making a decision.

Here are the biggest cons of long-term personal loans.

You’ll have a higher interest rate

Lenders usually charge higher interest rates when they face a higher risk.

Long-term personal loans present a higher risk because it takes a lender longer to get its money back, which means there’s more time for something to go wrong. Remember: Higher interest rates can lead to higher costs (more on that below).

You’ll be in debt longer

While you’ll likely have lower monthly payments, you’ll face those costs for years to come. Make sure you understand the commitment you’re taking on with a long-term personal loan and feel confident you can continue to make your payments well into the future.

Your total loan costs will increase

With a long-term personal loan, smaller monthly payments mean your balance stays higher for longer. Combine that with higher interest rates, and choosing a longer term could mean paying thousands more in interest over the life of your loan.

In the above example from SoFi, the total interest on a five-year loan is $5,600 — more than double the $2,607 paid on a three-year loan.

Because long-term personal loans have some significant downsides, it’s important to shop around and find a trustworthy lender.

5 best lenders for long-term personal loans

If you’re going to repay a personal loan for the next five years or more, you want to choose the right lender. The best long-term personal loans will have low interest rates and low origination fees.

In order to find the best long-term personal loan for you, you must request and compare customized rate quotes from a variety of lenders.

To get you started on your loan search, we’ve researched personal loan providers and rounded up our top picks.

These lenders offer long-term personal loans with terms to fit a wide range of borrowers’ needs:

    • SoFi: personal loans of five, six, and seven years
    • Upstart: five-year personal loans
    • Payoff: five-year personal loans
    • Avant: five-year personal loans

Each of these lenders also offers rate quotes using soft credit checks, so you can get a customized offer without affecting your credit. You also can compare different terms and rates with our calculator to see how they could affect your monthly payment and total interest costs.

Take your time shopping, researching, and comparing, and you can find long-term personal loans that meet your needs.

Interested in a personal loan?

LendingTree allows you to compare rates from multiple lenders by filling out one easy form. How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

RATES (APR)loan amount
5.99% – 19.16%1 $5,000 to $100,000
7.98% – 35.99% $1,000 to $50,000
7.99% – 35.97%* $1,000 to $35,000
99.00% – 199.00%2 $500 to $4,000
5.99% – 24.99%3 $5,000 to $35,000
7.99% – 29.99%4 $7,500 to $40,000
compare rates on Lendingtree now
NMLS #1136: Terms & Conditions Apply
1 Includes AutoPay discount. Important Disclosures for SoFi.

SoFi Disclosures

  1. Fixed rates from 5.99% APR to 18.82% APR (with AutoPay). SoFi rate ranges are current as of March 19, 2020 and are subject to change without notice. Not all rates and amounts available in all states. See Personal Loan eligibility details. Not all applicants qualify for the lowest rate. If approved for a loan, to qualify for the lowest rate, you must have a responsible financial history and meet other conditions. Your actual rate will be within the range of rates listed above and will depend on a variety of factors, including evaluation of your creditworthiness, years of professional experience, income and other factors. See APR examples and terms. The SoFi 0.25% AutoPay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account.
  2. To check the rates and terms you qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull.
    See Consumer Licenses.
  3. Minimum Credit Score: Not all applicants who meet SoFi’s minimum credit score requirements are approved for a personal loan. In addition to meeting SoFi’s minimum eligibility criteria, applicants must also meet other credit and underwriting requirements to qualify.
  4. If you lose your job through no fault of your own, you may apply for Unemployment Protection. SoFi will suspend your monthly SoFi loan payments and provide job placement assistance during your forbearance period. Interest will continue to accrue and will be added to your principal balance at the end of each forbearance period, to the extent permitted by applicable law. Benefits are offered in three month increments, and capped at 12 months, in aggregate, over the life of the loan. To be eligible for this assistance you must provide proof that you have applied for and are eligible for unemployment compensation, and you must actively work with our Career Advisory Group to look for new employment. If the loan is co-signed the unemployment protection applies where both the borrower and cosigner lose their job and meet conditions.
  5. Terms and Conditions Apply: SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet SoFi’s underwriting requirements. Not all borrowers receive the lowest rate. To qualify for the lowest rate, you must have a responsible financial history and meet other conditions. If approved, your actual rate will be within the range of rates listed above and will depend on a variety of factors, including term of loan, a responsible financial history, years of experience, income and other factors. Rates and Terms are subject to change at anytime without notice and are subject to state restrictions. SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. Licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. SoFi loans are originated by SoFi Lending Corp., NMLS # 1121636. (www.nmlsconsumeraccess.org)
2 Includes AutoPay discount. Important Disclosures for Opploans.

Opploans Disclosures

Direct Deposit required for payroll.

Opploans currently operates in these states: . *Approval may take longer if additional verification documents are requested. Not all loan requests are approved. Approval and loan terms vary based on credit determination and state law. Applications processed and approved before 7:30 p.m. ET Monday-Friday are typically funded the next business day.

  1. To qualify, a borrower must (i) be a U.S. citizen or permanent resident; (ii) reside in a state where OppLoans operates; (iii) have direct deposit; (iv) meet income requirements; (v) be 18 years of age (19 in Alabama); and, (vi) meet verification standards.
  2. NV Residents: The use of high-interest loans services should be used for short-term financial needs only and not as a long-term financial solution. Customers with credit difficulties should seek credit counseling before entering into any loan transaction.

  3. OppLoans performs no credit checks through the three major credit bureaus Experian, Equifax, or TransUnion. Applicants’ credit scores are provided by Clarity Services, Inc., a credit reporting agency.

  4. Based on customer service ratings on Google and Facebook. Testimonials reflect the individual’s opinion and may not be illustrative of all individual experiences with OppLoans. Check loan reviews.

  5.  

    Rates and terms vary by state.

3 Includes AutoPay discount. Important Disclosures for Payoff.

Payoff Disclosures

  1. All loans are subject to credit review and approval. Your actual rate depends upon credit score, loan amount, loan term, credit usage and history. Currently loans are not offered in: MA, MS, NE, NV, OH, and WV.
4 Important Disclosures for FreedomPlus.

FreedomPlus Disclosures

  1. The loan terms presented are not guaranteed and APRs presented are estimates only. To obtain a loan you must submit additional information and documentation and all loans are subject to credit review and our approval process. The range of APRs is 7.99% to 29.99% and your actual APR will depend upon factors including your credit score, usage and history, the requested loan amount, the stated loan purpose, and the term of the requested loan. To qualify for a 7.99% APR loan, a borrower will need excellent credit on a loan for an amount less than $12,000.00, and with a term equal to 24 months. Adding a co-borrower with sufficient income; using at least eighty-five percent (85%) of the loan proceeds to directly pay off qualifying existing debt; or showing proof of sufficient retirement savings, could help you also qualify for the lowest rate available. All loans are made by Cross River Bank and MetaBank®, N.A., Members FDIC.
* Important Disclosures for Upgrade Bank.

Upgrade Bank Disclosures

Personal loans made through Upgrade feature APRs of 7.99%-35.97%. All personal loans have a 2.9% to 8% origination fee, which is deducted from the loan proceeds. Lowest rates require Autopay and paying off a portion of existing debt directly. For example, if you receive a $10,000 loan with a 36-month term and a 17.98% APR (which includes a 14.32% yearly interest rate and a 5% one-time origination fee), you would receive $9,500 in your account and would have a required monthly payment of $343.33. Over the life of the loan, your payments would total $12,359.97. The APR on your loan may be higher or lower and your loan offers may not have multiple term lengths available. Actual rate depends on credit score, credit usage history, loan term, and other factors. Late payments or subsequent charges and fees may increase the cost of your fixed rate loan. There is no fee or penalty for repaying a loan early. Accept your loan offer and your funds will be sent to your bank or designated account within one (1) business day of clearing necessary verifications. Availability of the funds is dependent on how quickly your bank processes the transaction. From the time of approval, funds should be available within four (4) business days. Funds sent directly to pay off your creditors may take up to 2 weeks to clear, depending on the creditor. Personal loans issued by Upgrade’s lending partners. Information on Upgrade’s lending partners can be found at https://www.upgrade.com/lending-partners/.

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