Facts On Long-Term Personal Loans

Facts On Long-Term Personal Loans

Facts On Long-Term Personal Loans

A personal loan enables you to borrow money from a bank or any other financial institution. And you should repay that amount within a specific period of time. It is required to pay interest on this amount. Interest rates depend upon the amount of loan borrowed, the time period of repayment, and the applicant current financial status. Borrower can make the personal loan application from a loan officer or agent, over a telephone, and online. Based on the term, the personal loans are two types. Those are long-term and short-term.

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Long-Term Personal Loans

Repayment term is longer than other loans is the differentiating feature for long-term personal loans. They are often easily available for people with good credit history. The interest rates of these ones are bit higher than the other types. They require collateral or security. The lender can repossess the property of borrower if the borrower does not pay the amount.

Different Types Of Long-Term Personal Loan:

The two types of long-term personal loans are secured and unsecured.

*Secured long-term personal loan: The borrower can get the large amount of personal loan by putting any asset with the lender as collateral. The asset can be car, house, bond, stock, and real estate etc. The borrower can repay the loan, in a long duration time period that is 5 to 25 years. Due to long period of repayment, the borrower can reduce the monthly payment. In secured loan, the borrower can get his or her asset back after the total repayment of the loan amount.

*Unsecured long-term personal loan: It does not require any collateral. It helps borrowers to improve the credit by making on time payments and paying the loan fully. High risk loan offers high interest rates. The borrower can get the amount in the range $1000 to $25000.

There are two types of interest rates in long-term personal loan, fixed and variable rates. Fixed rates mean the interest rates never changed thought the life of the loan. The variable interest rate features a fluctuating payment in accordance with the current interest rates. Variable interest rates have more risk than the fixed rate as variable rates changes according to the market situations.

Major Benefits Of Long-Term Personal Loans:

*It is used for the debt consolidation, which helps to reduce the monthly payment.

*These types of loans are used for purchasing high priced items.

*They allow repayments over a long period of time. The time period is between 5 years to 20 years.

*These types of loans are easily available for consumers with a good credit history.

*It improves the borrower's credit report by making on time payments and paying the loan fully.

The above-mentioned types and benefits are helpful before opting for any long-term personal loan.

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