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Personal Loan
Long-Term Personal Loans: What You Need to Know
Key Takeaways
Long-term personal loans offer lower monthly payments for better cash flow management.
- IDFC FIRST Bank provides flexible repayment options to suit different financial situations.
- Understanding interest costs helps plan finances and avoid surprises over the loan tenure.
- Comparing loan tenure and amounts ensures the right choice for your personal needs.
Long-term personal loans can meet your requirement without disrupting your finances. But is that enough reason to lock yourself into a long-term financial commitment?
A long-term personal loan is a type of installment loan that allows borrowers to borrow a significant sum of money and repay it over an extended period, usually ranging from three to seven years. These loans are commonly used for major expenses such as home renovations, debt consolidation, or large purchases.
While a longer repayment schedule may seem like the right option, it has certain drawbacks. Borrowers must analyse the pros and cons before they convert their personal loans into a long-term commitment.
Pros of long-term personal loans
Long-term personal loans carry many benefits, including:
Freedom to choose your amount
If you apply for a personal loan for five or more years, you can borrow the maximum amount possible based on your existing debt-to-income ratio. Most major banks, such as IDFC FIRST Bank, offer five-year loans up to ₹15 lakh, although you must meet the eligibility criteria. Short-term personal loans usually come with a ceiling on the maximum amount you can borrow.
Easy EMIs
The EMI amount is less on a long-term personal loan. It gives you the flexibility to live your life and meet your goals without the financial burden of a loan.
Helps build your credit score
It takes time and consistency to build a strong credit score. A long-term personal loan can help you build your credit score, as the number of EMIs are more. If you pay all of them on time, it enhances your creditworthiness.
Long-term personal loans may or may not work in every situation. Like every product, it has certain drawbacks, but it does not decrease its popularity.
Cons of long-term personal loans
Here are a few cons of long-term personal loans:
Decreases your loan offer
A lender will evaluate your debt-to-income ratio before authorising your loan application. A long-term personal loan may affect your loan offer and make you ineligible for further loans. Also, paying EMIs monthly for a sustained duration is a task. Hence, before taking out a long-term personal loan, evaluate your current income, available funds, and repayment appetite.
Increased cost
Long-term personal loans are more expensive than short-term loans. The duration is more in long-term loans, so you end up paying interest every month. It amounts to a significant sum over time, which increases the cost of your personal loan.
More stress
A longer personal loan tenure will put you under financial strain for a longer time. You may need to regularly plan and monitor your monthly spending to ensure timely EMI payments. It can be challenging and might lead to mistakes in money management.
Long-term personal loans can help borrowers in time of need, and its flexibility ensures borrowers do not feel burdened by the loan. Many financial institutions, including IDFC FIRST Bank, offer long-term personal loans online to help borrowers quickly meet their requirements.
IDFC FIRST Bank, however, has a quick approval and disbursal process. If borrowers have a clean credit history, the loan amount can reach their accounts within hours. The interest rate is also affordable and among the best in the industry. Downloading the IDFC FIRST Bank mobile banking app to get a personal loan today.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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