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What Are Long-Term Personal Loans And How Do They Work?

5-Minute Read


If there’s one thing 2020 taught us, it’s that life is unpredictable. And sometimes, when things get unpredictable, we need money. Money we hadn’t known we’d need, and therefore didn’t save. Money we need—fast.

But what if the amount we need is large and we aren’t sure if we can pay it all back over a year or 3 or even 5? When those times arise, a long-term personal loan might seem like a good alternative. But keep in mind that these loans will cost you more in interest over time.

What Is A Long-Term Personal Loan?

In the world of personal loans, borrowers generally set the terms of the loan’s repayment. Borrowers can refer to our loan repayment calculator and see how much their monthly payment will be if they pay a loan back over 36 months, for example, as opposed to 60 months. Most personal lenders offer loans as long as 60 months. Some offer even longer terms. These are called long-term personal loans.

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How Long Term Can A Personal Loan Be?

There are lenders that offer 72-month or even 120-month personal loans, but they are harder to find than the more common 36- or 60-month loan.

Why Are Long-Term Personal Loans Less Common?

Think about it. Do you know what your financial situation will be in 10 years? You certainly have goals, plans and dreams, but you don’t know. You could be making lots of money, or you could be struggling, living paycheck to paycheck.

If it’s impossible for you to say, think how much more of a risk a lender would be taking. Lenders don’t know anything about your long-term financial health, or your future prospects. All they know is your financial history.

Lenders only make money if you pay back the loan with interest. Personal loans are unsecured, for the most part, and the longer the term of the loan, the more risk the lender is assuming. Responsible lenders don’t want to assume that risk, and lenders that are willing to want to be compensated more – lots more – to make that risk worthwhile.

Do Long-Term Personal Loans Cost More Than Short-Term Loans?

Yes, because the borrower will have to pay more to entice the lender into taking the risk, and because you’ll be paying it for a much longer time.

Let’s look at some numbers. Assume that you need $25,000 to consolidate your debt. First of all, that’s a great first step toward putting your finances in order. Now let’s consider how much it will cost you:

Loan Amount



Monthly Payment

Total Interest Paid

Total Amount Paid




$ 862.39






$ 583.60






$ 515.40






$ 384.66



*Note: This example includes an origination fee of $500. That amount is paid out of the loan proceeds. This means that to clear $25,000, a borrower would need to borrow $25,500.

**Note: Rocket Loans does not offer 72- or 120-month loans. For the purposes of this example, we used the same origination fee as the 36- and 60- month examples so that we could compare Total Interest Paid on an apples-to-apples basis. Actual origination fees charged by long-term lenders can be higher or lower than $500.

The Bottom Line?

If you choose to take a 10-year term, you will pay $15,113.41 more than you would have had you chosen a 3-year term, $11,143.37 more than if you had chosen a 5-year term and $9,051.07 more than if you had chosen a 6-year term.

Ten years from now, Future You will thank yourself if instead of having just paid off your debt, you have saved over $15,000 that might have gone to your lender but instead will go toward a down payment on a new home, or a renovation to your current home.

What If My Credit Score Isn’t Great?

If you have a low credit score, beware predatory lenders who may offer you money but will charge you an exorbitant interest rate and other fees, leading to an astronomical APR. Think about how much risk a lender would be taking to give a 10-year loan to a poor credit risk. Most legitimate lenders would pass, even at the highest interest rates.

If that’s your situation, you may be better off speaking to a credit counselor about ways to rebuild your credit before considering any personal loan.

Ready To Improve Your Financial Life?

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The Shorter The Loan Term, The Less You’ll Pay And The Sooner Your Debt Will Be Repaid

Being in debt is never fun, regardless of how you got there. The important thing to keep in mind is that the sooner it is behind you, the happier you’ll be. If at all possible, choose a shorter loan repayment period and save some money along the way, but be realistic when you choose so that you can make your payments on time each month.

Ready to get started? Apply for a 36- or 60-month Rocket Loans personal loan online and start putting your money troubles behind you sooner vs. later.

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It's Time To Achieve More:

Discover a personalized approach to borrowing with Rocket Loans.

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