Long-term loans are contracts between a lender and a borrower for 5 to 15 years. Usually, financial institutions provide long-term loans to help people break financial barriers. While you can use this loan for a variety of purposes, it doesn’t have a fixed term. They are necessary when it’s impossible to pay back a short-term loan. The major differences between financial institutions are in terms, conditions, interest rates, and agreements. This article discusses what long-term loans are, their features, requirements, benefits, and disadvantages.
What is a long-term loan?
A long-term loan is a loan that an individual borrows from a lender for a specific purpose. As long as the repayment options range from 5 to 15 years, you may be in for a long-term loan. Also, they refer to loans that a borrower will pay back over a long period. The interest rate on long-term loans is competitive. An interesting aspect is that you can use them for any purpose. As per the conditions of the loan, you will repay interest and principal over time regarding the loan contract.
Features of long-term loans in Ghana
It is possible to get long-term loans at low-interest rates. It motivates most of the people who use it. The following are a few of the features:
- The loan amount ranges from GH¢500 to GH¢100,000.
- Repayments of the loan are monthly.
- Processing loans quickly and conveniently.
- The loan will last between twelve and thirty-six months.
- A successful application results in immediate disbursement of funds.
What are the requirements?
Every application for a loan is subject to certain criteria. If getting this loan is your last resort to meet your financial needs. Here are the requirements you need to meet in order to get this loan.
- Accurately filled loan application form.
- Two passport-sized photos.
- A valid national identification card.
- An approved guarantor.
- You need to provide proof of employment.
- A passport-sized photo of the guarantor.
- National identification card of the guarantor.
When can one get a long-term loan in Ghana?
Individuals in Ghana with good credit are more likely to benefit from this loan. When you need a loan for an expensive, but valuable move, take out a long-term loan. These moves could include merging debt, improving your home, or hosting an event. Having a bad credit score can cause high interest rates. However, these loans are also good options when taking out a large sum of money and needing more time to pay it back.
What are the chances of getting a long-term loan with bad credit?
When applying for this loan, getting a good credit rating is helpful. Prospective borrowers should compare rates and terms of lenders before taking out this loan. You may be ineligible for a loan if you have bad credit. Poor credit history can prevent a person from qualifying for this loan with low interest. Hence, credit score requirements are specific to many financial institutions. Therefore, borrowers with poor credit may find it difficult to find a financial institution or lender willing to approve them. Also, we always recommend getting pre-approval before starting an application. Thus, the borrower can find out from whom and at what cost he or she may receive a loan. Also, without negatively affecting their credit scores.
Which financial institution offers a long-term loan in Ghana?
In Ghana, there are many financial institutions that offer this loan. These loans are available from
- Credit Union
- Savings and Loan companies
- Alternative lenders in Ghana.
Uses of a long-term loan
- Mortgage purchase
- Home improvement
- Car purchase
- Business investment
- Debt consolidation
- Personal needs
- Business start-up
What are the benefits?
There are several benefits with this loan. While paying it back gradually over time, you can solve that long-term need.
Some advantages are:
- Getting it is straightforward.
- The loan has multiple purposes.
- The repayment option is flexible.
- It meets a variety of needs.
- Payments are lower each month.
- Interest rates are lower.
- You can improve your credit rating with them.
- The long-term personal loan gives you more borrowing power and allows you to merge more debt.
- You can make your major purchase with it.
What are the disadvantages of taking a long-term loan?
The downsides include:
- A high rate of interest.
- Long-term repayment causes a change in finance.
- You will need collateral.
When you have an unstable financial situation, it is not advisable to apply for a long-term loan. However, you will have a lower credit score if you do not repay this loan, which financially affects you. Also, these loans are an affordable option when you need a loan in Ghana, but you may be perpetually in debt if you choose to take out a longer-term loan. If you are considering this loan, remember that debt is an additional financial burden. Your loan requires constant attention until you pay it back. They are more beneficial since they stretch out repayments.