Long-Term Personal Loans Offer Many Benefits

A long-term personal loan is a loan that allows lenders to lend money to people on a long-term basis. Also, they can come from lenders such as banks, credit unions, or online lenders, because lenders tend to lend money as long-term loans unless they lend short-term loans.

Borrowers can apply to borrow money by seeking out a loan officer or agent, usually found at lending companies, or they can apply via the telephone or even online. Interest rates depend on the amount of the loan, the time period for repayment – long- or short-term – and the financial status of the borrower, or the lack thereof.

What Makes Long-Term Loans Different from Short-Term Ones?

That the repayment term tends to encompass a period of time longer than other loans, such as short-term loans, is the differentiating feature for personal loans. Now certain loans are more easily had by folks who have reasonable credit ratings.

Of course, the rates for these are somewhat up there than the other types of lending agreements. And these require collateral or security. The lender can seize the property or collateral in case the borrower defaults.

Two Types of Long-Term Loans

Two forms of long-term loans exist. They are the secured and the unsecured loan.

One: The Secured Long-Term Personal Loan

A borrower can land the large amount of a long-term personal loan by using a valuable asset to hand over to the lender as collateral or security. These can be: car, house, stocks and bonds, or other real estate, etc. When it comes to paying back the loan, this can be a time-frame of 5-25 years. Since the payback time is so long, the lender can help the borrower reduce the monthly payment. Once the loan reaches maturity, the borrower can get the collateral or security back after the loan is paid off.

Two: The Unsecured Long-Term Personal Loan

Since these long-term personal loans do not require collateral or security, they are called unsecured personal loans. Of course, these unsecured loans help boost credit histories as long as the payments are made on time and in full as the loan contract specifies. Unsecured loans cost quite a bit more in interest rates charged because they are unsecured. Which makes sense since the lender has no secured property to sell if the loan is unsecured. The amount of these loans can range from $1000 to $25000.

Two Types of Interest Rates

Long-term personal loans can carry two types of interest rates because these are the only two types of interest rates to be carried – variable rates and fixed rates.

One: Fixed Interest Rates

Now fixed interest rates are called fixed because they are fixed at one rate that never changes over the maturity of the loan. The fixed rate is determined from the average over a previous time on the markets.

Two: Variable Interest Rates

Variable interest rates are called variable because the can vary over the maturity of it. These fluctuate according to the interest charged on the interest rate markets.

Five Benefits Seen from Long-Term Loans

1. Payments can be reduced from the sum of all payments if this loan is for debt consolidation.
2. These loans help in the purchase of high-ticket merchandise such as a refrigerator or lawn mower.
3. These loans allow repayments over a long period of time which can range from 5-25 years.
4. By making payments on time and successfully retiring the loan can result in improved credit scores.
5. These loans are easily available for folks who already have better than average credit scores.

Who Has the Best Title Loan Rates?

Do you need a car title loan? Such loans are term (usually short-term and up to 30 days) loans in which a vehicle serves as the loan’s collateral. Typically the amount of the loan is substantially lower than the vehicle’s resale value. That’s due to the loan being a short-term loan. Car title loans are ideal for emergencies when a person needs quick cash. Loans of the car title variety typically require minimal documents. They include those related to the vehicle’s title, a savings or checking bank account, and proof of employment.

Next, it’s time to get to the nitty-gritty of a car title loan. Here are some crucial terms and conditions that are linked to such loans:

1. The vehicle must be paid off (completely or nearly completely)

The reason is fairly obvious: the vehicle’s title would have significantly less value as collateral if the car or truck were only half paid off. So when comparing the terms of different lending companies that offer car title loans, learn if your vehicle must be paid off in full–in order to quality as collateral for such loans. If you don’t meet this particular term of such loans, then you should probably consider another type of short-term loan-such as paycheck loans.

2. The maximum amount of the loan can vary

Since a title loan is a short-term loan, it wouldn’t be reasonable to expect to receive a loan worth 100% of the vehicle’s resale value. One of the most crucial issues is the actual resale value of your car or truck. The average maximum amount available for such loans tends to be about 50% of a vehicle’s resale value. However, sometimes that figure is up to 75% of the vehicle’s resale value.

3. Full-disclosure is often provided

The operative word is “often.” Many lenders provide full-disclosure, in order to provide borrowers with a chance to make the best decision possible when taking out a short-term loan. On the other hand, other lenders don’t provide full-disclosure. In those situations it’s crucial that potential borrowers read and understand all of the terms and conditions involved in loans of the car title variety.

4. The borrower must pay off the loan at the end of the term

The loan must be paid off in a single payment. If the borrower is unable to pay title loans at the end of the term, then there’s sometimes an alternative option. He or she can “roll over” the loan, which involves taking out another car-title loan based on your vehicle’s title.

5. You could lose more than your car or truck

Not only could your vehicle be repossessed if you were unable to repay the loan, but you also might not be entitled to a profit that the lender made on the sale of your vehicle.

6. The interest rates and fees can be sky-high

This is a crucial issue to consider before taking out loans that require you to put up your car or truck as collateral. When compounded annually, the interest rate and fees can add up quickly. In fact, some lenders actually charge triple-digits in annual interest.