How to Get a Long-Term Personal Loan

A long-term personal loan is frequently used by consumers to consolidate debt or as start-up capital for small business ventures. The distinguishing feature of a long-term personal loan is the repayment term, which is generally much longer than what you'll normally get with a regular secured loan.

Difficulty: Moderate

Instructions

Things You'll Need:

• Good credit
• Supporting documentation of repayment ability (secure employment, monthly income statement)

Get a Long-Term Personal Loan

1. Identify your reason for seeking the loan. You'll be asked by the loan officer when you head to the bank to request the loan, and you'll need to present a compelling case as to why you need the long repayment term on an unsecured loan.

2. Ensure that your credit history is good to excellent. The better it is, the better your chances of having your loan application approved. If your credit rating is mediocre, spend some time rebuilding it before you try to get a long-term personal loan.

3. Keep in mind that, unlike other loan types, it is not practical to use a long-term personal loan to purchase a big-ticket item, like a new car, which could later be sold off to repay the loan. You'll need to provide the loan officer with supporting documents that show that your employment situation is very stable going forward and that your monthly income is ample enough to support loan repayments when they come due.

4. Try to negotiate the interest rate with the loan officer, if your application is pre-approved and you're dealing with a bank you've conducted business with for a long time. Long-term loans are unsecured, meaning the bank does not collect collateral to hold against the loan, so you need to understand that the financial institution is assuming a certain degree of risk in granting the loan--risk they must recover through interest.

5. Review all terms of the loan before you agree to sign the loan documents. You'll need to make sure you are thoroughly aware of any penalties the bank will impose on late or missed loan payments. Avoid these penalties at all costs as they'll just drive your bottom line skywards.

Tips & Warnings

• Deal with a bank where you've been a long-standing customer as you're much more likely to get a break on your interest rates and loan terms.
• Expect that interest rates on a long-term personal loan will be higher than other loan products. You're paying extra for the convenience of the repayment terms.