What is Long Term Loan?

Hi, 

In case you are planning to start your business or purchase a house, long-term loan is what you should be looking for. A few months back, I wasn’t even aware of long-term loans. So I asked my relationship manager at the bank about the definition of long term loan? 

He mentioned that the type of credit that is paid over a considerable amount of time is known as a long-term loan. These loans are generally somewhere between 3 to 30 years long and are availed from banks. 

Long-Term Loans: Eligibility and Documents Needed

That is how to define long term loan. He said that there is an eligibility which must be adhered to for long term loans. This is what he told me.

Eligibility Criteria Of Long-Term Loans

• You need a regular source of Income of ₹15000 per month. 

• You should be a citizen of India and should be between 18-35 years of age. 

• A guarantor must sign the particular loan application. 

You will only be eligible for a long-term loan when you fulfil these criteria. 

Documents Needed For Long-Term Loans

• Applicant’s salary slips or proof of income (Bank statements). 

• Permanent address proof. 

• Identity proof such as Voter ID, Aadhaar card, Passport, etc. 

• Fully filled out optional guarantor form, 

• Income statement proof of the guarantor. 

Apart from these, you might have to provide a few more documents that the bank might ask from you. I would suggest you to get in touch with your bank relationship manager to learn more about long term loans.

Are you planning to buy your dream home? Or do you have to pay for your child’s education? Or are you just starting your business and need a loan for it? If any of these cases is true for you, a long-term loan is the solution to all of your problems. But do you know what is long term loan meaning? This loan is provided by the banks and non-banking financial institutions and has many features that prove to be beneficial for borrowers. In this answer, I will break down long-term loans for you.

What is considered a long term loan?

Long Term Loans are secured loans that give you the privilege to use the loan amount to buy expensive products. This loan has quite long payback tenure. This means that you can pay it back over a longer period of time—typically between three and thirty years. Some common examples of long-term loans include home loans, car loans, two-wheeler loans, personal loans, and small business loans.

What is long term loan types?

1. Home Loans: If you have taken a home loan or if you know about home loans in general, you must know that a typical home loan term is between 10 and 30 years. And that is possible because the how that you purchase serves as collateral till you completely pay back the loan amount. Borrowers have the option of selecting a longer payback period with manageable EMIs.

2. Auto Loans: You can purchase a car or a two-wheeler with an auto loan. As far as I know, an auto loan can be repaid over a minimum of three years and a maximum of seven years. 

3. Business Loans: To start a new business or to grown in an existing business, you can take a business loan. You can choose long-term business loans with 5-year or even longer payback terms. 

Benefits and Features of Long-Term Loans

• Long-term loans have huge loan amounts because the things that we buy through long term loans are quite expensive.

• Now, since the term of the loan payback period is longer, the lenders usually offer lower interest rates to borrowers.

• In long term loans, usually the product for which the loan is taken, serves as the collateral. So, in case a borrower doesn't pay back the loan as agreed, the collateral allows lenders to recover their money.

• You must already know that EMIs are a loan repayment method made available by lenders. In a long term loan, a portion of the principal amount and interest are both included in each EMI.

• The most beneficial feature of a long term loan is that they offer tax benefits. The best example is a home loan, where you can use Section 80C of the Income Tax Act of 1961 to claim tax deductions of INR 150,000 on the loan payments. Similarly, the Section 24B allows for annual tax deductions of INR 200,000 for interest payments.

So, this is

long term loan meaning.