Long-Term Loan: Types, Features & Benefits | DBS Bank (2024)

FAQs

What are the types of long term loans? ›

Long Term Loans

This loan comes with significantly higher repayment tenures, and you can repay it over an extended period of time, usually ranging from 3 years to 30 years. Examples of long-term loans include Home Loans, Car Loans, Two-Wheeler Loans, Personal Loans, Small Business Loans, to name a few.

The key features of bank loans are just the principal amount and interest rate; the tenure and amortization are not crucial elements. The key features of bank loans include collateral (the security for the loan), credit score of the borrower, and bank's reputation.

A form of loan that is paid off over an extended period of time greater than 3 years is termed as a long-term loan. This time period can be anywhere between 3-30 years. Car loans, home loans and certain personal loans are examples of long-term loans.

These factors influence the term loan interest rates. There are three types of term loans, namely, short term loans, intermediate term loans, and long term loans.

Longer repayment terms on personal loans will lower your monthly payment and a long-term loan might make you feel as though you're under less pressure to get the loan paid back quickly. However, longer repayment terms on personal loans also make those loans more expensive.

The advantages of debt financing include lower interest rates, tax deductibility, and flexible repayment terms. The disadvantages of debt financing include the potential for personal liability, higher interest rates, and the need to collateralize the loan.

In case of long-term loans, the interest rate can be either fixed or floating type. The interest rates hover between 8.90% and 12%, depending on the type of loan. One must check the interest rates with different banks before finally applying to a particular lender.

Key Takeaways

A term loan provides borrowers with a lump sum of cash upfront in exchange for specific borrowing terms. Borrowers agree to pay their lenders a fixed amount over a certain repayment schedule with either a fixed or floating interest rate.

What is bank loan advantages and disadvantages? ›

The interest rates for secured loans may be lower than for unsecured ones, but your assets or home could be at risk if you cannot make the repayments. There may be a charge if you want to repay the loan before the end of the loan term, particularly if the interest rate on the loan is fixed.

Key Takeaways. A bank is a financial institution licensed to receive deposits and make loans. There are several types of banks including retail, commercial, and investment banks. In most countries, banks are regulated by the national government or central bank.

Personal loan amounts generally range from as low as $1,000 to as high as $100,000. The exact range varies from lender to lender. For example, among the best personal loan lenders, there are lenders that offer loans from $1,000 to $50,000, $2,000 to $30,000, and $5,000 to $100,000.

Secured loans are typically a more affordable choice as they are backed by collateral and have lower interest rates than unsecured loans.

Long-term finance can be defined as any financial instrument with maturity exceeding one year (such as bank loans, bonds, leasing and other forms of debt finance), and public and private equity instruments.

The two forms of long-term debt most often used to create capital are bonds payable and long-term notes payable. A bond is a contract between an investor and an organization known as a bond indenture.

Equity and debt financing are the most commonly referred to, but both are forms of long-term financing.

Some lenders offer repayment terms for six, seven and even up to 12 years. Personal loans can be handy when you need funding in a pinch for a big expense.