The EMI cost of the loan will be lesser than those of short term loans. There are many benefits of choosing a long term personal loan and at the same time, the cons should not be disregarded. Here are the Advantages and Disadvantages of long term personal loans. Advantages of long term personal loan:Supports to Build your Credit Score: If you require to use your loan to increase your credit score, then a long term personal loan operates best for you. The rise of credit score needs a quite long time, so using a long term personal loan and executing the loan with control makes your credit score improve.Eligible for Top-Up Loans: A longer loan delivers you eligible for a top-up loan as long as the duration runs. A personal loan customer is eligible for top-up loans after repaying EMI of the initial 12 months. Hence, if your loan duration is for 5 years, you can get eligible for a top-up loan for 4 years. But in the event of short tenure loans, you miss the opportunity.Magnifies Loan Eligibility: If you opt for higher loan tenure, it will assist you to get a much better loan amount. A longer tenure decreases the EMI amount so the repayment displays simple. Before approving any kind of loan, lenders perform checks if the customer can pay off the loan comfortably. In the cases of low EMI amount, the lenders readily sanction a higher loan sum as the chances of defaulting grow less.Keeps the EMI Amount Smaller: As stated above, longer duration minimises the EMI amount, it displays easy for the customer to pay off the loan. One can quickly pay off the loan without making huge changes in the monthly budget. Before petitioning for a personal loan check your EMI amount in personal loan EMI calculator. Disadvantages of Long Term Personal Loans.Lowers your Qualification for New Loans
The loan eligibility of a customer is determined on the repayment capacity. As long as you sustain a loan, your loan eligibility for new loans is lessened as you have set responsibility towards your ongoing loan. The lenders perform checks that the total due of every month should not be higher than 50% of your net monthly earnings. Allahabad bank personal loan can assist you to get a long term loan. Paying High Interest: Interest rate is determined on diminishing balance principal. Due to loan amortization program during initial months EMI’s a larger portion goes towards interest than principal. This implies that if you want to prepay or top-up your loan than your principal sum will not be decreased significantly and you may conclude paying higher interest ratesStaying Debt-Burdened for Longer: A long term personal loan will hold you under the debt for a long period. Being under debt for a long time may cause you to feel the debt-burdened. You will perpetually need to be restrained with your financial obligations for a long period.
Conclusion- If you need to avail a long term personal loan for any reason be it wedding or debt consolidation. All you need to do is ensure you have a healthy score of 700 (if you don’t have a score of 700, some lenders will give you the loan). You also need to have a stable source of income. For more information on personal loans visit the Dialabank website.
Author's Bio: Gaurav S. Khurana is the Founder and CEO of Dialabank and has had a great career in the Banking and Financial Services Sector. He has an experience of 18 years in the sector and has worked at Senior Roles including National Sales Head at ING Investment Management India and as the Vice President Citibank. A post-graduate from IMT, Ghaziabad. Gaurav started his career as a Named Account Manager in Xerox.
Being a part of this field for a long time now, he has written many informative articles and blogs benefiting and assisting many in making decisions regarding the policies provided by various banks and non-banking financial companies such as the Allahabad Bank Personal Loan policy.
About the Author
Gaurav S. Khurana is the Founder and CEO of Dialabank and has had a great career in the Banking and Financial Services Sector. He has an experience of 18 years in the sector and has worked at Senior Roles.