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A long-term loan is a type of personal loan that is used for large purchases or expenses, like a new home or a new vehicle. Long-term loans usually take at least 5 years to pay off in full. A mortgage is the most common example of a long-term loan, but there are other types that can help you cover substantial purchases. To find different types of loans available to you, sign up for Borrowell. You can find and compare loans that match your credit profile and meet your unique needs. Instantly see your approval chances before applying for the right loan.
A loan is considered “long-term” if it has a payback period longer than five years, with the average length of a long-term loan falling around seven years. Some long-term loans, like student loans, tend to have slightly longer terms, closer to ten years in length. The longest term for a loan in Canada is usually around 35 years and is traditionally reserved for mortgages.
Since long-term loans spread your payments out over a longer period of time, your lender has the opportunity to earn more interest from you over time. As a result, your interest rate (and monthly payment) on a long-term loan will often be lower than a short-term loan.
Monthly payments can be deceiving, however. Since a long-term loan is stretched out over many years, the monthly payment will be significantly lower, but that doesn’t always mean the interest rate is lower. Make sure to compare your interest rates between long and short-term loans directly to make sure you are getting the lowest possible rate.
You can use Borrowell to compare interest rates on a wide range of loans that are available to you.
There are two primary types of long-term loans: secured and unsecured loans. Secured loans are backed by an asset as collateral. Car loans and mortgages are typical examples of secured loans. In each case, the loan is secured by the physical item you’ve purchased. Secured loans tend to have lower interest rates because the collateral can be seized if you don’t make your payments on time.
An unsecured loan does not have a physical asset as collateral. Instead, your lender must rely on a credit check to determine your credit score and financial profile to determine whether you qualify for a loan. As a result, long-term unsecured loans often have slightly higher interest rates.
Yes! You can still qualify for a long-term loan with a low credit score. Keep in mind that a low credit score can make it more challenging to qualify for any loan, including long-term loans. If you find yourself in need of a long-term loan and have a low credit score, several lenders specialize in lending to borrowers with a low credit score, but their interest rates tend to be higher than traditional lenders.
You can sign up for Borrowell to check your credit score for free and see what long-term loans you qualify for from trusted Canadian lenders.
Alternatively, some traditional lenders will accept co-signers or guarantors for long-term loans. A co-signer or guarantor promises to pay your loan if you don’t make your payments on time. Possibly paying for someone’s long-term loan is a big responsibility to take on, which is why most co-signers or guarantors are related to their borrowers.
When applying for a long-term loan, you’ll need the following information:
If you’re applying for a long-term loan to purchase a home or a vehicle, you’ll also need details about that asset.
Your credit score is one of the main criteria for qualifying for online loans, including car loans, a mortgages, or other types of onlines loans. To make the application process easier, you should know what your actual credit score is before applying for online loans. With Borrowell, you can quickly check your credit score for free to speed up the process.
When lenders check your credit score, it is recorded on your credit report as a “hard inquiry.” Hard credit inquiries temporarily lower your credit score, and applying for many loans at once results in multiple hits to your credit score. To protect your credit score, you should only apply for loans that you’re confident you’ll qualify for.
To minimize impacts to your credit score, you want to make sure you apply for a loan that you'll likely get approved for. Borrowell helps protect your credit score by showing you your likelihood of approval for recommended loan offers, based on your credit score.
When you sign up to Borrowell, you’ll get your free Equifax credit score free in just three minutes. Checking your score won't impact it, and you can see which loans you will be eligible for.
Borrowell automatically matches your credit profile with the best loan products available based on your credit score. Select your offer and complete the online application.
Once your personal loan is approved by a Borrowell loan partner, you can usually access your funds in just a few days.
Yes, it's really free. Borrowell provides you with your Equifax credit score, free of charge. Based on your credit score, we provide you recommendations on the best loans, credit cards, and financial products that you are likely to qualify for. Knowing your credit score speeds up the loan application process and helps you get your money as quickly as possible.
Some loans, like mortgages, or car loans, can only be used for specific types of assets. Other kinds of long-term loans, like personal loans, are lump sums of cash that you can use for anything. That said, it’s a good idea to tell your lender what the purpose of the loan is since that information may help you qualify for a lower interest rate.
The answer to this question depends on the type of long-term loan. Some loans, like mortgages, have limits on how quickly you can pay off the loan. The limits exist because your lender offers you a lower interest rate on the assumption that they will earn at least a set amount of interest on the loan. The limits on extra payments ensure they make a minimum profit.
Other types of long-term loans, like student loans and many car loans and personal loans, do not limit early payoff. Paying off your loan early will not hurt your credit score. If you plan to pay off your loan early, ask your lender if there are any limitations on early repayment before signing your loan agreement.
The longest period of time you’ll find for a long-term loan is 35 years.
Long-term loans can either be secured by an asset or unsecured. Secured loans are backed by an asset that will have a lower interest rate because they are less risky for the lender, who can seize your asset if you default on your loan.
Unsecured loans will have more stringent qualification criteria, especially if you plan to borrow a more considerable sum. Be prepared for your lender to scrutinize your income and pull your credit score via a credit check during the qualification process if you apply for an unsecured loan.
Long-term loans can be obtained by a wide variety of lenders, with widely differing interest rates and terms. The best interest rates will come from traditional lenders like banks and credit unions. These lenders often allow you to submit your application online, but you may have to go to a branch to sign the final documents in person.
If you’re looking for a long-term loan that you can qualify for entirely online, you should use a loan aggregator like Borrowell to find lenders who specialize in online lending. Borrowell works with over 50 trusted lenders to match you with loans that suit your financial profile. If you have unique financial circumstances like a low credit score, Borrowell can help there, too, matching you with lenders that will work with your circumstances.
A long-term loan is a big commitment, and we highly recommend you compare options from several lenders before locking in your loan and interest rate.
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