What Is a Long Term Personal Loan – Pros & Cons of Getting One

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Money plays an essential role in every human being’s life. Without money, it is hard to fulfill your aspirations. However, quite often, your funds might fall short of your requirements; this is when a personal loan comes to your rescue.

However, while applying for a personal loan, people often find it challenging to make the right choice between a long term personal loan and the short one. Read this article to know the difference between both and better ones.

What is a Long Term Personal Loan?

Generally, when you apply for a personal loan, most lenders expect you to return the principal and interest before three years from the date of loan approval. However, you can also extend the tenure beyond three years. When you do so, the loan is classified as a long term personal loan.

Scroll down to find out the pros and cons of a long term personal loan.

Long Term Personal Loan – Advantages

  1. Brings Down Your EMIs

Almost every Indian borrower knows that a long tenure brings down the EMIs. But how does it work? EMI, or Equated Monthly Instalment, is a combination of principal and interest. During the early part of the loan repayment tenure, your EMIs would go towards paying off the loan interest. As the interest burden comes down, you start repaying the principal. This process is known as loan amortization.

If you opt for a long term personal loan, your EMIs will come down automatically, as the interest and the principal get evenly spread out. To understand this better, you may use a personal loan EMI calculator.

  1. Increases the Possibility of Loan Approval

If the loan amount you apply for is high and the tenure is short, then lenders might exercise caution while scrutinizing your loan application. They would check your credit score, existing liabilities, expense habit, post-tax income, and other details, before approving the loan. And the chances are high that the personal loan application might get rejected if the documents show that your repayment capability is not up to the mark.

If you apply for a long term personal loan, there is a high probability that the lender will be generous towards granting the loan, as the lower EMIs would cause less stress on your finances.

  1. Enhances Your Credit Profile

If you have been struggling to get a high-value loan approved due to a poor credit score, then a long term personal loan is all you need. When you take a long term loan and repay regularly, your credit score will increase. A high credit score can enable you to apply for a high-value personal loan by submitting minimum documents.

Long Term Personal Loan – Disadvantages

  1. Increase in Interest Rate

Generally, personal loan interest rates start from 11.99% and may go up to 36%. However, when you apply for a long term personal loan, the interest rate may be on the higher side. The higher interest may increase your EMIs a little.

Hence, before applying for a long term personal loan, carefully evaluate your spending habits. If a higher EMI would not impact your finances much, then you may go for a short term personal loan.

  1. Extended Burden of Debt

A long term personal loan increases your debt, which also means that you have to make it a point not to miss your EMIs. Failure to repay the EMIs on time can lower your credit score and make further loan approvals difficult.

  1. Might Make You Ineligible to Apply For a Fresh High-Value Loan

Lenders usually evaluate the documents you attach with the personal loan application and find out your existing liabilities before considering you suitable to avail of the loan. If you have a current debt to settle off, the lender might not approve a new loan.


Before applying for a long term personal loan, check your eligibility, and the personal loan documents required to avail it. Often, applying for a long term loan is easy, but repaying the EMIs is not. Carefully consider all aspects and discuss with the lender before submitting the loan application form.

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Alfred Williams, a distinguished business writer, navigates the corporate landscape with finesse. His articles offer invaluable insights into the dynamic world of business. Alfred's expertise shines, providing readers with a trustworthy guide through the complexities of modern commerce.