BestUnsecuredLoans helps borrowers find long-term loans as well as short-term loans and payday loans. You don’t have to have a perfect repayment history either – it’s our job to find the best long-term loans for bad credit applicants too.

 In this article, we look at the pros and cons of long-term loans.

 What are the advantages of a long-term loan?

 You have much longer to repay

 With payday loans, you have to repay the loan in full plus the interest within 30 days of taking the loan out. With short-term loans, you have, usually, between 2 and 12 months to repay the money you borrowed plus the interest on top.

 If you want to take out a sizeable amount of money but you’ve only got a short amount of time to pay it back, you might not be able to comfortably make the repayments on time and in full to your lender because there’s no enough spare cash in your household at the end of the month to meet the cost.

With a long-term loan (including long-term loans for bad credit), you have up to 5 years to make the repayment. If you borrow £2,500 over 12 months, that’s £208.33 plus the interest you have to find every month. However, if you take out the same amount of money over 36 months, that’s £69.44 plus the interest.

Interest rates are normally a lot lower

 Short-term loans and payday loans tend to have much higher interest rates than longer-term loans. The higher the interest you pay on a loan, the more it costs you in total to pay it back in full.

 With long-term loans, even long-terms for bad credit applicants, the interest rate you may be offered will be a fraction of what you would be offered with a short-term loan or a business loan. However, this is not always the case so make sure you read any offer you receive from a lender carefully before deciding whether it’s the right deal for you and whether you can afford it.

 You can pay for big-ticket purchases

 With most short-term loans lasting 12 months or less, you’ll struggle to find a lender who will be happy to give you a loan of more than £2,500. The reason? They’re concerned that paying back the loan and the interest which put too much pressure on your disposable income. Your disposable income is what you have left from your wages after you’ve paid out everything you need to pay out for over the course of a month (like mortgage, rent, insurance, Sky, and so on).

 Lenders are much happy to allow borrowers to take out loans of up to £50,000 as long as the repayments are spread over a long enough time. This gives them the peace of mind that you can afford to make your repayments to them in full and on time.

 What are the disadvantages of a long-term loan?

 The longer you borrow, the more interest you pay

 Although, by taking out your loan over a longer period, you will reduce your monthly repayments, you’ll end up paying more for your loan over time.

 Let’s say that you wanted to borrow £10,000 over 3 years and you were charged £1,000 a year in interest. You’d end up paying back £13,000 in total (the £10,000 loan plus £3,000 in interest)– each month, your lender would collect £361.11. If you borrowed that £10,000 over 5 years where each year of interest was charged at £1,000 to you, you’d end up paying £15,000, £2,000 more than if you’d taken out the loan over 3 years.

 Although you’d pay back £250 a month on a 5 year loan making it more affordable each month, you’ll be £2,000 poorer on a 5 year loan than a 3 year loan because of the interest you’ll pay.

 Tougher application process and acceptance criteria

 The more money you borrow, the more risk a lender is taking. This extra risk means that it can be harder to find a company who wants to lend you the money. If you’re looking for long-term loans for bad credit applicants, finding a loan company to work with you will be even harder.

 You may need to provide more information than with a short-term loan or a payday loan. It may take longer to be accepted and, therefore, longer to get your money. BestUnsecuredLoans works with borrowers who want long-term loans (including long-term loans for bad credit applicants) and we enjoy a high degree of success because we know the best finance providers to present your application to. More on that later.

 Borrowing more than you need

 Because you have up to 5 years to pay off your loan, many borrowers are tempted to ask for £1,000 or £2,000 more than they actually need.

 Please make sure that, before you apply for a long-term loan, you know exactly how much you need to borrow and why. There’s no point to you in paying interest on money you don’t actually need.

 Early repayment charges

 Some lenders will charge you for either overpaying your loan (so that you bring the balance down faster) or for paying your loan off early. Please check a lender’s terms and conditions before agreeing to any loan for repayment charges as, if you find the money to settle your loan early, this will be an unpleasant and unexpected surprise.

 Account Fees

 Most lenders charge you if you miss a payment or they have to chase you for payment using either a letter or someone from their own debt recovery call centre. Again, as with early repayment charges, check terms and conditions carefully before accepting a loan offer.

 If a long term loan is right for you, get in touch with BestUnsecuredLoan

 Even though there are significant advantages to a long-term loan, it’s important to consider carefully what the downside are if you have been offered one. We advise all Best Unsecured Loans customers to shop around for the best long term loan so that you get a deal that’s right for you.

 That’s where we come in. We’re not a lender here at Best Unsecured Loans, we’re a broker. We match lenders and borrowers in seconds using our state-of-the art computer system. We’ll contact all the lender we think you’ve got the best chance of having your application accepted and, then, we present you with the very best deal we’ve found. You don’t have to accept any offer we find for you and our service is free at all times.

 To start your application, please click here.