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Long-term loans explained

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Spread the cost of your repayments over a longer period of time.

Hand stacking silver coins with a wooden clock in the foreground

Paying off your loan but for longer: is there a higher interest rate? Can you borrow more? Are they easier to get? We answer all your long-term loan questions. 

This this is an educational guide. The figures we’ve used here are a general representation of the market rather than what we currently offer.

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A long-term loan is when you borrow money and pay the debt off over a period longer than a year. Long term loans can be repaid over anything from two years to seven years.

Just like a normal loan there’s interest added on top that you have to pay on top of the debt. But the biggest selling point of a long-term loan is that the monthly repayments tend to be lower and so easier to afford.

Despite the lower monthly repayments overall yes, a long-term loan will usually be more expensive. This is because you’re repaying a lower amount per month, over a longer time frame, and with interest for that whole period.

For example, let's look at an £8,000 loan with a 3.8% APR interest:

3 years
7 years

Long-term loans allow for more flexibility not only in how long you repay the debt, but how much you want to borrow.

You can usually borrow more with a longer-term loan. And there are a wide range of lenders to choose from.

Loans, whether you choose a shorter term or longer term one, shouldn’t be rushed into. We can’t guess how life will look in five or 10 years. So, you need to weigh up the pros and cons of a long-term loan as it’s a commitment - it’ll be with you for a while.


  • Easier to manage monthly repayments as they’re spread over a long period of time
  • Option to borrow more, with lenders offering you a larger amount because you’ll be repaying it back for longer
  • Your credit rating could improve because you’re showing you can pay off a debt
  • Flexibility to choose over how many years you want to repay the money


  • You may have to pay an early repayment fee when you for repay a part, or all of the debt early. This is something to look out for when applying.
  • You pay back more overall because the timeframe is longer. So even if the interest is a low rate, it adds up to be more than if you’d paid it back sooner.
  • Secure or unsecured – some providers will ask you to secure the loan against an asset. This is usually your house or car, so if you can’t make the payments, they’ll use this as collateral.

You might still be able to get a long-term loan if you’ve got a bad credit rating. But you may find that the interest options you get back from lenders are higher.

If you’ve got a bad credit history and existing debts, a long-term loan may be an option as you can consolidate your debt.

This is where you move your debt into one place and so make a single monthly repayment. As you pay the debt off, you should see your credit improve too.

In some instances, providers may ask you for a guarantor in case you suddenly can’t make repayments, so they’d pay on your behalf.

Or they may offer you a secured loan, which is where your house or car is used as collateral if you can’t make repayments.

Be aware that when you apply for a long-term loan provider will do a hard credit check that can stay on your credit report for up to two years.

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