long term loans

Long-Term Loans: Abundance of Choices

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“Financial freedom is available to those who learn about it and work for it”

Robert Kiyosaki

The lending system was originated in ancient Greece and Rome period over 3000 years ago. Initially, the system was followed by the exchange of goods for goods or money.

              Example: people get money or goods from the lenders and in return, the borrower would give the equivalent amount of goods to the lender or would work for him to repay the loan amount.

The modern lending system aroused from the 1962s in the UK to relax the financial banking system and to emerge the lending market, after which the concept of lending and borrowing money from different lenders apart from the financial institutions like banks became much popular in the UK financial market. It not only helped banks to breathe out better but helped many other lending institutions to stand better in the market.

There are majorly 2 types of loans

  • Secured Loans: In secured loans, the borrower pledges some asset (car, house, or any personal item) as collateral to acquire the loan. In secured loans, the lender is givena security- a lien on the title to the asset or the property until the borrower pays off the loan amount in full and if the borrower fails to pay the lender then the assets become the lender’s possessions.
  • Unsecured Loans: These are a popular and easy sort of loans in the UK market. These loans are not secured against the borrower’s assets. The repayment ability is detected by the lenders to lend money to the borrower. It is a very swift and facile way to borrow money where you need not pledge any asset as collateral nor you need to worry if you have a bad credit score as despite bad credits many people obtain unsecured loans easily. As a bad credit score is not the only deciding factor for approval of a loan.
  • Long-term Loans

Long-term loans are a form of debt that is paid off over an extended period that exceeds over one year in duration. The loan that is borrowed in long-term loans is pre-planned with consideration to the repayment schedule. The debt or general obligation is not protected in unsecured long-term loans.

  • Benefits of long-term loans
  1. Flexibility: The loans are flexible in terms of repayment or payback that suits the borrower. The amount that is borrowed is usually higher than the short-term loan amount because of which the repayments ability of a person tends to be more flexible than usual repayments. It is also flexible in terms of acquiring a loan and procedural formalities.
  1. Lower repayments: Because the repayments are spread over a longer period, due to a higher amount of the loan, the monthly repayments are usually set at a lower rate than those of short-term loans.
  • No limit on loan amount: A large amount of money with flexible repayment is availed on long-term loans. A person has to qualify for obtaining a long-term loan and then he can obtain a huge amount and can use the amount according to his needs and pay in easy instalments.
  1. Improves credit scores: As the finance term is longer and the borrower has plenty of time for repayment, due to which cyclic repayments of the debt amounts becomes steady which in turn helps in improving and positively building the credit score.

Lower interest rates: Due to longer terms, the interest rates are lower in comparison to other options. The interest rates are usually fixed and do not vary during the complete tenure.

 Top 3 Long-Term Loans

  • Unsecured Student Loans: Unsecured student loans are a very popular long-term loan in the UK. Any full-time or part-time undergraduate or postgraduate can apply for a student loan to pay the university and tuition fee for the college. The amount that can be borrowed for the tuition fee automatically depends on the amount required to cover the course fee of the university. After 2012, the repayment cycle of student loan begins once the student starts earning over 25000 pounds per year and are also based upon the salary too. The borrower has not to pay the loan amount but the amount is usually cut off from the salary itself and the person receives the salary. Also, you won’t pay more than what you can afford, this makes you pay off the loan and also earn some money at the same time.
  • Unsecured Personal Loans: Personal loans are cheap credit loans, which have been obtained without the use of property or any asset as collateral. For a personal loan, the applicant must have sufficient disposable income to afford the loan. In the UK, the minimum amount one can borrow on a personal loan is 1000 pounds and the maximum is 25000 pounds and more depending upon different lenders. The loan terms typically range from 1-10 years. Personal loans are a quicker way of getting a loan because the repayment amounts are usually fixed for each month, which makes it easier to budget your monthly spending. It is also a beneficial option to consolidate different debts, as it will help in potentially reducing the monthly repayment costs on loan amounts.
  • Unsecured Homeowner Loans: Popularly known as Home Equity Loans,these are famous kind of loans that has multi-purpose uses and there are no restrictions on the usage of borrowed funds. Home equity loans are a type of loans that are not secured on your home but the value of the property is always put into consideration to assess the amount that the lender can offer to a borrower.

The mortgage industry has been dominated by building societies and there were around 11.1 million mortgages in the UK. It is also seen that keeping your assets as a mortgage for acquiring loans puts those assets on a stake, while in case of unsecured homeowner loans it does not require you to keep any mortgage as collateral to attain the loan amount. The loan amount can also be used for home improvements and renovations that can help in uplifting the rate of your property for future use.


At last, it can be concluded as long-term loans prove to be a beneficial option for those people who are seeking for options for huge loan amounts and with long-term repayment tenure, with fewer interest rates that would help them for there needs and in turnwill also help to improve credit scores. It is also important to understand the loan terms for your betterment, convenience, and ease.

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