What Long Term Personal Loans Are All About

A borrower is only able apply for a loan over the phone or online from a certain loan officer or an agent. And it is a known fact that lenders base the interest rates on how much was borrowed, the length of payment period, and the financial status of the borrower. There are two types of personal loans based on terms, the long-term and short-term. The two are set apart from each other because of the repayment period.

People with good credit records normally have better chances to be approved for long-term personal loans. But it’s not the case with all long-term personal loans. There are two subtypes, secured and unsecured. With the secured type, any asset should be given as collateral to the lender before getting approved for the loan. The borrower can repay for a long period of time, say 5 to 25 years, and because of this, the monthly payment can be cut down. After repaying the total loan amount, the borrower can then get the asset back from the lender.

Unsecured long-term personal loans do not require any assets whatsoever. It aids people to boost their credit by paying on time and in full amounts. Since this is considered as a high-risk loan, expect that interest rates will also be high.

There are two types of interest rate in long-term personal loans, fixed rate and variable rate. With fixed rates, it simply means that the interest rates never change all throughout the life of the loan and so is the payment, while with variable interest rates, the payments change constantly depending on the current interest rates. The variable type is the riskier one then since it depends on the market situations.

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.

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