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The Pros and Cons of Long-Term Loans

Last updated 03/26/2024 by

Jessica Walrack
When it comes to personal loans, is it better to go with a short term or a long term? Long-term loans give you more time to repay the debt, and they come with lower monthly payments. But they bring a few drawbacks as well.
Read on to learn more about long-term personal loans, and how to find the best lender for you.

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What are long-term personal loans?

A long-term personal loan is an unsecured loan with a repayment period of 36 months or more. That means that with a long-term loan, you have at least three years to pay back what you borrowed.
These lenders all offer long-term personal loans.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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How much can you borrow with a long-term loan?

Long-term loans often come with larger loan amounts than short-term loans, ranging from $1,000 up to $100,000. This can be helpful if you have a limited monthly income but need to pay for a large expense like debt consolidation, a wedding, or a car repair.
Note that the loan amount range will vary from one lender to the next.

How much do long-term loans cost?

The cost of a long-term loan includes interest and fees.


The interest costs of a long-term loan are expressed as an annual percentage rate (APRs). A loan’s APR is the percentage of the total loan amount that you will pay each year.
For example, if you borrow $10,000 with a five-year term and a 5% APR, you would pay about $500 in interest each year and $2,500 in total. The lower the APR, the less you will pay.


Long-term loans also come with fees, including:
  • Application fees.
  • Late payment fees.
  • Origination fees.
  • Prepayment fees.
When added up, these fees can significantly raise the cost of a loan. It’s important to find all of a lender’s fees upfront so you don’t run into any surprises that will offset the value of the loan.

Is it hard to get a long-term loan?

From a lender’s standpoint, the longer the loan, the riskier it is. Life is unpredictable and situations can change a lot in three to five years. People can get married, divorced, have kids, lose their jobs, get sick, etc.
As such, most lenders have criteria in place to screen out high-risk applicants. For example, one lender might require you to have a credit score of 650 or higher to qualify. Another might require you to have held the same job for two or more years or to have a salary that exceeds $70,000.
The eligibility requirements, loan amounts, costs, and loan terms also vary significantly from one lender to the next.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Long-term loans vs. short-term loans

Is a long-term loan better than a short-term loan?
Not necessarily.

Long-term loans

Long-term loans offer higher loan amounts and competitive APRs, and they let you spread out your repayments over more time. This can help you to afford a larger loan while keeping your monthly payments low. But there’s a downside. The longer the loan period, the more you pay in interest overall. Additionally, longer loans are harder to get approved for.

Short-term loans

Short-term loan lenders usually offer smaller loan amounts and higher APRs. However, by paying off the loan quickly, you can minimize your interest payments.
While short-term loans are easier to get approved for, they may not enable you to borrow as much as you could with a long-term loan. Further, shorter loan terms mean higher monthly payments.
How much difference does the term length make in the cost of a loan? Let’s look at an example. If you took out a loan for $7000 with an APR of 12%, here’s what it would cost you month-to-month and overall for three different loan terms.
Loan TermMonthly Payment AmountInterest Cost Overall
12-Month Loan$621.94$463.30
36-Month Loan$232.50$1,370.01
60-Month Loan$155.71$2,342.67

Which is better?

The answer depends on your circumstances.
If you have at least fair credit or better, need a large loan amount, and want low monthly payments, a long-term loan will be a good fit.
If you need a smaller loan amount, can repay it within a short period, and/or don’t have great credit, a short-term loan would likely be better for you.

Long-term loan pros and cons

Here is a list of the benefits and the drawbacks of long-term loans.
  • Larger loan amounts.
  • Competitive interest rates.
  • Affordable monthly payments.
  • Many lenders to choose from.
  • Higher overall borrowing costs.
  • Can be more difficult to get approved.

Long-term loan comparison guide

If you decide a long-term loan is right for you, you should shop around to find the best deal available to you. Offers vary a great deal from one lender to the next. When comparing lenders, consider the following factors:
  • Loan amount: Look at the loan amount range. For example, one lender may offer loans from $500 to $5,000 while another may offer $2,000 to $35,000. Determine how much you want to borrow and then narrow down your lender options to those that offer compatible loan amounts.
  • APR: Lower ranges mean lower costs, but they may also be more difficult to get approved for. Find the right fit for your situation.
  • Loan term: Lenders will also offer a range of loan terms, for example, 24 to 60 months or 18 to 36 months. Confirm that their offered range contains your desired loan term.
  • Fees: Find out what fees a lender charges and factor them into your cost/benefit evaluation.
  • Customer reviews: Read reviews to learn what past customers said about a lender. Are they satisfied? Did they run into any problems? You want a lender with a good track record and reputation.
Be sure to consider each of these factors in the process of choosing a lender. Our personal loan review page can help you to compare industry-leading lenders side-by-side.

Find the best deal on a long-term loan

Ready to find out if you qualify for a long-term loan? You can skip the research time and still get a great deal with SuperMoney’s personal loan engine. Answer a few questions and we will find out if you pre-qualify with our network of vetted lenders. In minutes, we’ll send you a slew of offers to compare side-by-side. It’s personal loan shopping made easy. And pre-qualifying won’t hurt your credit score.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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Jessica Walrack

Jessica Walrack is a personal finance writer at SuperMoney, The Simple Dollar,, Commonbond, Bankrate, NextAdvisor, Guardian, and many others. She specializes in taking personal finance topics like loans, credit cards, and budgeting, and making them accessible and fun.

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