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What are Long-Term Loans?

Long-term loans are those which are repaid over a longer tenure. Their repayment tenures may extend to up to 30 years, and they can be secured or unsecured. 


Loans that are usually paid off in a time frame of more than 3 years belong to the category of long-term loans. While longer repayment tenures decrease your EMI amount, you end up paying a lot more as interest. 


Long-term loans have proven instrumental in resolving myriad financial needs as they can be easily paid off in significantly smaller EMIs without disturbing your finances. In addition, these types of credit facilities help you tackle unexpected financial emergencies. 


Simply put, long-term loans are typically used to fund milestone moments, such as financing your child’s or your wedding, expanding your business, or buying/renovating a house.

Purpose of Long-Term Loans

While long-term loans include car, home or educational loans, note that a few long-term personal loans can also be included. Whether you need funds to establish your business or to meet educational expenses, these loans are one of the most popular financial tools. 


For instance, you may require a significant amount when planning for higher studies. Availing loans of longer tenure provides a higher repayment period, and your child can clear the outstanding after getting employed.


With low long-term loan interest rates, getting a car or a home loan is more feasible than using other options. Besides the benefit of a long-term loan duration, this loan type minimises the stress on your savings. 


So, long-term loans are best suited for you if you are looking for a high loan amount at affordable EMIs.

Interest Rates & Other Charges of Long-Term Personal Loans Offered by Different Lenders


Applicable Interest Rates (%p.a.)

Processing charges

Axis Bank

Starting from 10.49%

Processing fee of ₹5,000 to be paid upfront and 1% of total loan amount with GST

Bajaj Finserv

Starting from 11.00%

Up to 3.84% of the total loan amount

Kotak Mahindra

Starting from 10.99%

Up to 3% of the loan amount


Starting from 12%

Up to 6% of the loan amount


Starting from 10.99%

Up to 2.50% of the loan amount

Muthoot Finance

Starting from 14.50%

2% to 4% of the total loan amount

Disclaimer: The interest rates and processing charges are subject to change at the discretion of the lender.

Examples of long-term loans

Now that you are familiar with the purpose of these loans, here are a few different types of long-term loans.

1. Home loans

Home loans are among the common types of long-term loans. With it, you can avail a hefty loan amount with a lengthy repayment tenure. However, note that you need to pledge collateral along with a guarantor signature on your loan application, when availing home loans.


While you can choose between fixed and floating interest rates, you also have the option to foreclose the home loan as per bank’s norms. 

2. Educational loans

As the name implies, these long-term loans are ideal for funding higher education. While these loans are sanctioned mostly for professional courses, you can avail them to complete your studies in India or abroad.


With a long repayment tenure of between 3 and 15 years, it helps manage tuition fees and other expenses incurred during education. 

3. Car loan

With a repayment tenure between 3 and 7 years, it is one of the popular credit facilities. The application process is a hassle-free process and you can use the loan to finance the purchase of a new or used car. You can negotiate the interest rates with your lender based on your total income, credit score and other liabilities. 

4. Personal loans

Usually, these loans have a smaller repayment tenure of up to 60 months, which can vary depending on the lender. However, there are long-term personal loans extending beyond 3 years.


Being a long-term unsecured loan, you do not have to pledge collateral or require a guarantor’s signature. However, you may have to pay high interest on the loan amount than on personal loans of shorter duration.


Simply put, availing these long-term loans online is quicker considering the minimal documentation process.

Advantages of Long-Term Personal Loans

Here are a few essential benefits of availing these loans:

  • Longer repayment tenure reduces your EMI amount, thereby helping you easily manage your monthly expenses.

  • Net monthly income ratio (NMI) is fixed between 55% and 60%, considering the existing liabilities and EMI of the proposed long-term loan.

  • Low NMI ratio because of smaller EMIs helps you repay the loan without any defaults

  • Higher EMI affordability enables you to avail a higher loan sanction.

  • Opting for a long-term loan provides flexibility and maintains liquidity to help you manage other financial requirements.

Disadvantages of Long-Term Personal Loans

While there are many benefits of availing long-term loans, here are a few disadvantages you need to be aware of:


  • Availing these loans increases your interest outgo due to longer tenure.

  • Choosing a long repayment tenure reduces your chances for availing additional loans as your NMI ratio will be impacted.

To avoid this, all you have to do is initiate part prepayments and clear the outstanding whenever possible. Not only does this reduce the interest payable but also improves your eligibility for availing other credit facilities.

Eligibility Criteria for Long-Term Personal Loans

While long-term loans have a longer repayment tenure, you have to strictly adhere to eligibility guidelines when availing them. Here are a few crucial parameters:


  • You must be between 18 and 35 years 

  • You need to have a regular income source

  • You must be an Indian citizen

  • You need a guarantor to sign your loan application in case of a home loan

  • You must have a good credit score and a healthy financial history

Documents Required for Long-Term Loans

Here are a few basic documents you have to submit when availing these loans:


  • Copy of permanent address proof such as an Aadhaar card, Passport, rental agreement, etc.

  • Copy of ID proof such as PAN card, Aadhaar card, Passport, Voter ID, etc.

  • Copy of an income proof document

  • Latest bank statements

  • Your salary slips

The paperwork required can vary based on the lender. 

How to Apply for a Long-Term Loan

You can opt for online or offline mode to avail a loan. Thanks to digitisation, most lenders offer an online facility, thus reducing the processing time. All you have to do is visit the lender’s website and apply. 


Then, submit the necessary documents and await approval. For offline applications, visit the nearest branch of the lender and meet the concerned officer in charge of loans. Another mode is the call-back facility initiated by most lenders.


Here, you have to dial a specific number and the representative may call you back. After discussing your loan requirements, your documents are collected from your home.


Now that you know the features, pros and cons of availing long-term loans, apply online on Bajaj Markets. With lenders offering affordable interest rates, this digital marketplace can cater to your financial requirements quickly. 

FAQs on Long-Term Personal Loan

As long-term loans have a longer repayment period, the interest charged on them can be lower compared to short-term loans options.

To avail a loan, you need to have a fixed income source else getting approval can be difficult.

No. You can co-borrow long-term loans, and both applicants must have an adequate profile to get approval.

When you avail a long-term loan, your interest rate can be lower as the repayment tenure is long. However, the interest payable is higher since you are servicing the loan for longer.

Yes, you can foreclose your loan according to the norms set by the lender.

A good credit score is a crucial factor in availing any credit facility. For applicants with a poor credit score, it is important to apply with a guarantor that has an excellent profile. This makes it easier to get approval.

The maximum amount varies from one lender to another. While you can get up to ₹2 Crores for home loans, some lenders may offer a higher sanction based on your profile.

Yes, you can avail a long-term loan with a tenure of 10 years.

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