Long-Term Loans

Interest Rates of Long Term Personal Loans offered by Different Lenders

Note: Rates as of 27th November 2024

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Features of Long Term Personal Loans

Long term personal loan interest rates usually start from 10.49% p.a. onwards. However, some public sector banks might offer long term personal loans at lower interest rates. These loans do not come with end-usage restrictions except for speculation. The applicants are not required to submit any collateral or security. Some lenders also offer pre-approved instant personal loans to their select customers having good credit profile.

Advantages of Long Term Personal Loans

• The longer repayment tenure reduces the EMI for the borrowers. This helps the borrower to continue with their expenses, both unavoidable as well as discretionary, and investments for their long term financial goals
• Most lenders usually prefer the personal loan applicants to have EMI/NMI (Net Monthly Income) ratio within 55-60%. Both existing EMIs as well as the EMI of the proposed personal loan is considered while calculating this ratio. Thus, reduced EMI due to longer tenure would increase the chances of availing personal loan for the applicant.
• Reduced EMI/NMI ratio due to lower EMIs would increase the chances of timely EMI repayments. Timely loan repayments would help in building/improving the credit score of the borrower and thereby, improve their future loan and credit card eligibility.
• Lower EMI/NMI ratio increases EMI affordability, thereby, helping them to avail higher loan amount.
• As most lenders offer personal loan tenures between 1 year and 5 years, applicants opting for long term personal loans have a wider range of lenders to choose from.

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Disadvantages of Long Term Personal Loans

• The applicants availing long term personal loans have to incur higher interest cost over the loan tenure.
• Long term personal loans would block the borrowers’ EMI/NMI ratio for longer period, thereby impacting their eligibility for additional loans for longer period.

The best way to reduce the adverse impacts of long term personal loans is to make prepayments (part/full), whenever possible. Making prepayments would help in reducing the overall interest cost and increase your eligibility for availing other loans during the tenure of your personal loan.

Eligibility Criteria for Applicants availing Long Term Personal Loans

The eligibility criteria for long term personal loans can vary across lenders. However, the undermentioned list would give you a fair idea about personal loan eligibility criteria required for availing long term personal loans.

• Minimum age: Usually 21 years
• Minimum monthly income: Rs 15,000 or above (for most lenders)
• The applicants with credit scores of 750 and above usually have higher chances of availing personal loans at lower interest rates. However, some lenders might also offer longer term personal loans to applicants with lower credit scores at higher interest rates.
• Salaried individuals employed with government or public sector companies have higher chances of availing long term personal loans. They are followed by salaried individuals working with MNCs or reputed private sector organizations.
• Self-employed individuals are required to have business vintage of at least 3 years

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Documents Required for Loan Application

• ID Proof- PAN Card/Voter ID/Aadhar Card/Driving License/Passport
• Address Proof- Aadhar card/electricity bills/gas connection bills/Voter ID/Driving License/Passport/copy of ration card
• Form 16/ITR for past 3 years
• Salary slips for past 3 months
• Bank account statement for last 6 months