Long-Term Personal Loans Offer Many Benefits

A long-term personal loan is a loan that allows lenders to lend money to people on a long-term
basis. Also, they can come from lenders such as banks, credit unions, or online lenders, because
lenders tend to lend money as long-term loans unless they lend short-term loans.

Borrowers can apply to borrow money by seeking out a loan officer or agent, usually found at
lending companies, or they can apply via the telephone or even online. Interest rates depend on
the amount of the loan, the time period for repayment - long- or short-term - and the financial
status of the borrower, or the lack thereof.

What Makes Long-Term Loans Different from Short-Term Ones?

That the repayment term tends to encompass a period of time longer than other loans, such as
short-term loans, is the differentiating feature for personal loans. Now certain loans are more
easily had by folks who have reasonable credit ratings.

Of course, the rates for these are somewhat up there than the other types of lending agreements.
And these require collateral or security. The lender can seize the property or collateral in case the
borrower defaults. 

Two Types of Long-Term Loans

Two forms of long-term loans exist. They are the secured and the unsecured loan.

One: The Secured Long-Term Personal Loan

A borrower can land the large amount of a long-term personal loan by using a valuable asset to
hand over to the lender as collateral or security. These can be: car, house, stocks and bonds, or
other real estate, etc. When it comes to paying back the loan, this can be a time-frame of 5-25
years. Since the payback time is so long, the lender can help the borrower reduce the monthly
payment. Once the loan reaches maturity, the borrower can get the collateral or security back
after the loan is paid off. Instant Personal Loan

Two: The Unsecured Long-Term Personal Loan

Since these long-term personal loans do not require collateral or security, they are called
unsecured personal loans. Of course, these unsecured loans help boost credit histories as long as
the payments are made on time and in full as the loan contract specifies. Unsecured loans cost
quite a bit more in interest rates charged because they are unsecured. Which makes sense since
the lender has no secured property to sell if the loan is unsecured. 

Two Types of Interest Rates

Long-term personal loans can carry two types of interest rates because these are the only two
types of interest rates to be carried - variable rates and fixed rates.

One: Fixed Interest Rates

Now fixed interest rates are called fixed because they are fixed at one rate that never changes
over the maturity of the loan. The fixed rate is determined from the average over a previous time
on the markets.

Two: Variable Interest Rates

Variable interest rates are called variable because the can vary over the maturity of it. These fluctuate
according to the interest charged on the interest rate markets.

Five Benefits Seen from Long-Term Loans

1. Payments can be reduced from the sum of all payments if this loan is for debt consolidation.

2. These loans help in the purchase of high-ticket merchandise such as a refrigerator or lawn mower.

3. These loans allow repayments over a long period of time which can range from 5-25 years.

4. By making payments on time and successfully retiring the loan can result in improved credit scores.

5. These loans are easily available for folks who already have better than average credit scores.