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Long-term personal loans can be an attractive borrowing option if you’re facing large expenses, like significant medical bills or home repairs. Paying off a personal loan long term allows borrowers to spread out repayment into manageable installments. Long-term loans often allow for lower monthly payment amounts that can make major costs more affordable.
However, long-term loans can have drawbacks, too. They may have higher cumulative interest than short-term loans. What’s more, they can be difficult to qualify for since they’re often unsecured. Learn the full story here.
Key Points
• Long-term personal loans typically have repayment periods of 5 to 7 years, though some lenders extend up to 10 years.
• These loans often provide large sums, potentially up to $100,000, for diverse uses.
• While monthly payments might be lower, the total interest paid over the loan term can be higher.
• Due to stringent requirements, qualifying for a long-term personal loan can be challenging.
• Alternatives include borrowing from close contacts or opting for a short-term, unsecured personal loan.
What Is a Long-Term Personal Loan?
As you explore what are long-term loans, you’ll quickly see that personal loans aren’t the only example of this type of lending. Mortgages and private student loans are also examples of long-term loans. Mortgages, for instance, are frequently repaid over as many as 30 years.
How Long-Term Personal Loans Differ from Short-Term Loans
As its name suggests, a long-term loan is one whose repayment period, or term, is fairly lengthy. Generally, long-term personal loans carry terms between 60 and 84 months, or five to seven years, though some lenders may offer terms up to 10 years.
In this article, the focus is on long-term, unsecured personal loans, which borrowers can use for a variety of purposes. These loans can allow consumers to make big purchases or pay expensive bills by paying the total off over several years’ time.
Pros of Long-Term Personal Loans
There are plenty of reasons why a long-term loan might be a worthy consideration for large expenses.
Large Loan Amounts
While short-term loans and credit cards may cap out at a few thousand dollars, long-term, unsecured personal loans are available at much higher amounts — up to as much as $100,000. So depending on what you need the money for, a long-term personal loan might give you more leverage than other types of funding.
Lower Monthly Payments
Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan. However, that doesn’t mean a long-term loan is less expensive in the long run. To compare costs, it’s important to look at total interest paid over the life of the loan.
Flexibility
Unlike secured loans, which are tied to a physical piece of collateral or the need to be used for a specified purpose, unsecured personal loans can be taken out for a wide range of uses. Common reasons borrowers take out personal loans include:
• Home renovations or repairs.
• Medical expenses.
• Wedding loans or funeral expenses.
Cons of Long-Term Personal Loans
Like any form of consumer debt, long-term personal loans have some potential drawbacks worth considering.
Potentially Higher Interest Rates
Although long-term, unsecured personal loans may have smaller monthly payments, they can sometimes carry higher interest rates than shorter-term, unsecured personal loans. And unsecured loans typically have higher interest rates than secured loans.
Personal loan interest rates currently range from about 6.50% to as much as 36.00% annual percentage rate, or APR. The average personal loan interest rate in mid-2026 is 12.38%.
For example, imagine you take out a $10,000 loan at an interest rate of 10%. To repay the loan in a single year, you’d have to pay $879 per month, but you’d only pay a total of $550 in interest over the lifetime of the loan.
To repay the loan in seven years, you’d pay only $166 per month, but you’d also pay $3,945 in interest along the way.
So while long-term, unsecured personal loans can make large purchases feasible, factoring in the total cost over the lifetime of the loan before you sign those papers is also important.
Long-Term Debt
Along with higher interest rates, long-term loans do, obviously, mean going into debt for a longer period of time — unless you plan to pay off your loan early. A thorough review of the loan agreement will disclose any personal loan prepayment penalty or other fees that can be costly in their own right.
Furthermore, the future is unpredictable. Five to seven years down the line, that promotion you were counting on might fall through or another life circumstance might leave you unable to repay the personal loan.
If you find yourself in a situation where you need to borrow more cash, it can be difficult to increase your personal loan amount.
Although unsecured personal loans can be helpful when life throws big expenses your way, they’re still a form of consumer debt, and, ideally, minimizing debt is a smart thing to do.
Qualification Difficulties
Long-term, unsecured personal loans may have more stringent qualification requirements than other types of credit. That’s because, from the lender’s perspective, they’re riskier than loans for smaller amounts or those that come attached to physical collateral.
Along with your credit score and history, a potential lender might also require proof of income and employment or a certain debt-to-income ratio (DTI). Depending on the stability of your financial situation, you may or may not qualify for the best interest rates and terms or be considered eligible to take out the loan at all, at least without a cosigner or co-borrower.
How to Compare Long-Term Personal Loan Offers
Don’t just look at the interest rate a lender is offering you. Consider the personal loan APR vs. interest rate. Including fees in your comparison by looking at the APR will help level the playing field between lenders.
Another factor to consider is the personal loan term length. Generally, the shorter the repayment term the higher the monthly payment will be — but the lower your interest costs will be over the life of the loan.
Alternatives to Long-Term Personal Loans
Ideally, the best way to pay for a large purchase is to save up the cash and pay for it without going into debt at all. Of course, this may not always be possible or realistic.
If you’re not sure about paying off a personal loan long term, there are other alternatives to consider. However, each of these comes with its own risk-to-reward ratio as well.
You might consider borrowing money from friends and family, but those important relationships can suffer if your repayment doesn’t go as planned. A written repayment agreement can go a long way toward making the transaction as transparent as possible, with expectations of both parties clearly outlined.
Another option might be saving part of the money you need and applying for a short-term, unsecured personal loan for the remainder. This means delaying a purchase until savings can accumulate, and might not work if the money is needed sooner rather than later.
What are long-term loans that aren’t personal loans? Home equity loans also have a lengthy repayment term. In this case the loan is secured by the equity the borrower has in a home that they own. These loans can have lower interest rates than personal loans, but if you can’t make your monthly payments, you risk losing your property to foreclosure.
Recommended: A Guide to Unsecured Personal Loans
The Takeaway
Long-term loans are those whose repayment periods generally span between five and seven years, which can help borrowers fund expensive purchases while making affordable monthly payments. However, the longer term can also mean more interest charges over time.
Your credit score and/or financial situation can suffer if you make late payments or miss payments altogether. That said, when used responsibly, long-term, unsecured personal loans can be a smart financial choice, particularly if you shop around for a lender who offers affordable, fixed interest rates, low fees, and great customer service to ensure you’ll always be in the know and in control.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.
FAQ
What is a disadvantage of long-term borrowing?
When you take out a long-term loan, even one with a low interest rate, it can cost more because you’ll be paying interest for a longer period of time.
What is the risk of a long-term loan?
Aside from mortgages, that can help you build wealth, loans taken out over a long term mean you will take many years to repay the debt. This means you may wind up paying the creditor more interest, perhaps even more than the amount you borrowed.
What are the pros of a personal loan?
Personal loans can get you a lump sum of cash quickly to use for almost any purpose, from a major dental bill to a home renovation. They tend to have lower interest rates than credit cards.
Is a long-term personal loan a good idea?
A long-term personal loan can be a good idea if you have a specific need for funds (such as to pay off high-interest credit card debt) and you can obtain a personal loan with a loan term and interest rate that make your monthly payments manageable.
How do long-term personal loans differ from short-term loans?
Long-term personal loans have repayments terms that can stretch from five to seven years, while short-term loans have a tighter timeline. Monthly loan payments are usually lower with long-term loans than they are with short-term ones, however total interest costs on a long-term loan are often higher than those on a short-term loan.
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