Long Term Loan - Interest Rates, Types, Features, Eligibility And Apply Online  (2024)

Long term loans are loans that come with a longer repayment tenure of up to 30 years and lower interest rates starting from 7% p.a. Such loans are secured loans, meaning you need to pledge collateral in the form of property, vehicle, etc.

Let’s find out more about long-term loans, such as its features, benefits and application process.

What is a Long Term Loan?

Long-term loans are secured loans that come with an extended repayment tenure which can be anywhere between 3 and 30 years. Some examples include education loan, home loan, etc.

Since you need collateral for approval, the interest rates are usually on the lower side, starting from 7% p.a. Also, long term loans have a big ticket-size, meaning you can apply for loans more than Rs.1 crore.

Features and Benefits of Long-Term Loans

1. Low Interest Rate

Since you need to pledge collateral to avail of a long-term loan, lenders usually charge lower interest rate compared to short-term unsecured loans like personal loans.

2. High Loan Amount

You can get loans more than Rs.1 crore with long-term loans. For instance, you can get home loans, which is a long-term loan, more than Rs.5 crore. Whereas, for short-term loans like personal loans, maximum credit is capped at Rs.50 lakh (may vary from lender to lender).

3. Tax Benefits

Certain long-term loans like home loans come with tax benefits. For home loans, you can claim deduction up to Rs.1.5 lakh on EMI paid on the principal portion of the loan. Similarly, you can claim tax benefits on the interest paid under section 24 (b).

4. Longer Repayment Period

Long-term loans come with a longer repayment tenure that can range anywhere between 10 years and 30 years. This gives a lot of flexibility to borrowers while repaying their loan.

How to Apply for a Long Term Loan?

Follow the steps below to apply for a long-term loan:

1. Step 1: Download and install your preferred lender’s app from Google Play Store or Apple Store. Alternatively, you can also visit their website.
2. Step 2: Go to the loan section and click on ‘Apply’
3. Step 2: Fill in your personal details
4. Step 3: Provide your PAN, Aadhaar, Income proof and other documents required.. Wait for the approval and the validation of the loan which is mostly done instantly.
5. Step 4: Upon verification, your preferred loan amount would be disbursed to your account

However, this process could be extremely time consuming. To skip queues and long waits, download the Navi app and apply for loans of your choice. We offer instant approvals on home loans up to Rs.5 crore in a 100% paperless manner!

Documents Required for Long Term Loan

Here are some of the common documents required:

• PAN Card, Aadhar Card, driving license or voter ID
• Last 3 months’ Salary slips
• 6 months’ bank statements.
• Residential address or business proof

Eligibility Criteria for Long Term Loan

There are certain eligibility parameters that are laid down by the lenders and out of those most common ones include:

• Age: 21 to 65 years
• Nationality: Indian resident or NRI
• Employment status – Salaried or Self-Employed

Interest Rates and Other Charges

Disclaimer: This table is for educational purposes only

How to Calculate Interest Amount on Long Term Loans?

Calculating the interest amount on a long term loan depends on the type of loan. For example, interest calculation for a secured loan such as an education or home loan will be different from a personal unsecured loan. Also, it varies with the type of interest rate, i.e., fixed or floating interest rate.

Here is how you can calculate the interest amount on a personal loan:

1. You can use the following formula in Microsoft Excel:

IPMT(rate, per, nper, PV, [fv], [type])

Where,

• rate= rate of interest per year (if you are doing a monthly calculation, divide it by 12)
• per= the month or instalment for which you are calculating the interest amount
• nper= overall loan tenure (in numbers of EMIs)
• PV= principal/ loan amount
• [fv]= this is an optional field and refers to any desired cash balance at the end of loan tenure, which is typically set at 0
• [type]= this field can be 0 or 1, depending on if the payment is being at the end or starting of a month

2. For calculating any other type of loan, you can use this simple formula given below:

EMI (monthly payments) = p X r X (1+ r) ^ n/ {( 1 + r) ^n-1}

Where,

• p = principal or loan amount
• R= interest rate applicable
• N= tenure in the number of months

Calculate Your Personal Loan EMI

Types of Long-Term Loans

There are many types of long-term loans:

1. Home Loans

One of the most well-known examples of long-term loans is home loans. You can get financing of up to 90% of the property value at affordable rates with home loans. The repayment tenure ranges from 25 – 30 years. However, you need to set your property as collateral for home loans.

2. Car Loans

In recent years, car loans have gradually become the most necessary loan product. Taking car or auto loans has increased significantly since banks made it easier to secure credit for the purchase of vehicles. Because automobiles are considered luxury commodities, the interest rates on these loans are greater than those on housing loans.

3. Education Loan

An education loan is a sum of money borrowed to pay for post-secondary education or expenses associated with higher education. Education loans are designed to pay the costs of tuition, books and supplies, as well as living expenses while a student is pursuing a degree. Payments are frequently deferred while students are in college, and depending on the lender, they may be extended for another six months after graduation. A “grace period” is a term used to describe this time period.

Top Banks that Offer Long Term Loans

Here is the list of top 5 banks that offer long term loans in 2022:

• Axis Bank
• HDFC Bank
• ICICI Bank
• State Bank of India
• Kotak Mahindra Bank

Top NBFCs that Offer Long Term Loans

The following list includes the names of the top 5 NBFCs which offer long term loans at attractive interest rates in 2022:

• Navi
• Muthoot Finance
• Tata Capital
• Bajaj Finserv
• Mahindra Finance

Final Word

Long-term loans have become one of the most popular financial instruments as banks offer various options that help you choose the correct loan that suits your financial requirement.

Whether you need it for buying a house, car or for a small business or any other personal purposes, this loan is one of the beneficial financial help you can bank on.

FAQs

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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.

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