Most unsecured personal loans have terms that are between one and five years. Long-term personal loans are those that carry longer payback periods, usually up to seven years. Some banks, credit unions and online lenders offer long-term personal loans.
Here are the pros and cons of long-term personal loans, when to consider one and a summary of the lenders that offer them.
Pros of taking a long-term personal loan
- Larger loan amounts: When you want to borrow a large sum of money for, say, home improvements or medical procedures, lenders may give you the option of a longer term to pay the loan back.
- Lower monthly payments: For the same amount borrowed, loans with longer terms will have lower monthly payments than shorter-term loans. However, the benefit of having a longer term may be offset by a higher interest rate. Choose a monthly payment you can afford, but factor in both the interest rate and the loan term when you apply for a loan.
Cons of taking a long-term personal loan
- Higher interest rates: Lenders may charge higher rates for long-term loans because they are considered more risky. The longer you have to pay back a loan, the greater the possibility that your money situation will change in a way that prevents you from paying back the loan as agreed.
- More interest: Unless you pay the loan off early, you will pay more in interest over the life of the loan than you would with a shorter-term loan.
- Your finances might change: Your financial picture is likely to evolve in the course of six to seven years. Carrying a long-term debt means you might have to make trade-offs with future financial decisions.
When to consider a long-term personal loan
A long-term loan is ideal when you’re borrowing a large sum of money and need more time to pay it back. You may need to borrow $50,000 for a kitchen remodel, for example, and a longer term will reduce your monthly payments. As with all personal loans, you can use the funds for almost any purpose.
If you want a long-term loan to consolidate your debts into one simple payment, consider this first: A debt consolidation loan works best if you get a lower interest rate on the loan than the combined interest rate on your existing debt, or if the loan allows you to get rid of debt faster than your current pace.
For example, if you know it will take you 10 years to pay off your cards, a seven-year consolidation loan may be a better option. Use our debt consolidation calculator to estimate potential savings before you opt for a loan.
» MORE: Best debt consolidation loans
Where to get a long-term personal loan
Banks: Citizens Bank and Discover offer loan terms of up to seven years, while PNC Bank allows terms of up to six years. Citizens Bank and Discover require minimum credit scores of 600 and 660, respectively. PNC Bank does not disclose a minimum credit score requirement, but its annual report says borrowers typically have fair to good credit (scores between 630 and 689).
Credit unions: Credit unions are a good first option for personal loans because they have low rates and flexible loan features. But credit unions typically run a hard credit pull when you apply, without a pre-qualification option. (A hard pull temporarily knocks a few points off your credit score.)
Both First Tech Federal Credit Union and Navy Federal Credit Union allow loan terms of up to seven years. Navy Federal has home improvement loans with terms of up to 15 years. Neither credit union has a required minimum credit score.
Online lenders: Online loans are fast and convenient. Only a handful of online lenders offer longer loan terms, including LightStream, Marcus by Goldman Sachs and SoFi. These lenders cater to good-credit borrowers.
Summary of long-term loan options
|Lender||Minimum credit score||Typical APR range||Get started|
|Citizens Bank||600||6.8% - 20.9%|
|Discover||660||6.99% - 24.99%|
|PNC Bank||Not disclosed||5.99% - 26.24%|
|First Tech||None||9.0% - 18.0%|
|Navy Federal||None||7.99% - 18.0%|
|LightStream||660||4.99% - 16.79% (with autopay)|
|Marcus||660||5.99% - 28.99%|
|SoFi||680||5.74% - 16.79% (with autopay)|