3 Common Types Of Long Term Loans & Where To Get Them

As we go through life, there’ll be times when we’re required to make hefty purchases. These include buying your first home and settling tuition fees for tertiary education. Generally, these purchases require large long term loans from banks or long term money lenders that allow you to spread out the purchase’s payment over a lengthy period of time.

If you’re not sure what types of long term loans there are or how you can obtain one from a loan provider, including long term money lenders, we’ve got you covered.

Read on and find out all you need to know about loans with long term payment and how you can fund your milestone purchases seamlessly.

What are long term loans?

As the name suggests, a long term loan is a loan that bears a relatively longer tenure. It can be secured or unsecured, depending on how the lender assesses your purpose for taking up a loan and your financial situation. Additionally, loan amounts are usually higher while interest rates are generally lower.

When would you require long term loans?

A long term loan is normally required when you need financing for a big-ticket purchase. This allows you to spread out the cost across several years or even decades. Such purchases include:

• Owning a property
• Buying a car
• Paying course fees for tertiary education
• Starting a business

This list is not exhaustive. Depending on how your discussion with the legal money lender goes, they may even recommend you a long term loan instead of one with a shorter tenure.

What are the key features of long term loans?

There are several features of a long term loan that set it apart from a short term one. These include:

1. The loan tenure

The main reason why a long term loan has this particular name is its lengthy loan tenure. For reference, a personal loan’s tenure is usually capped at around five to seven years. On the other hand, a long term loan’s maximum tenure can be several decades. That’s because of the next feature.

2. The loan amount

If you’re thinking, ‘how much can I borrow from a money lender if I get a long term loan?’, we’re here to address your question!

A loan with long term payment also bears a relatively large principal amount, which necessitates the lengthy tenure. Recall that a loan with long term payment is generally used to cover the cost of a home, car, or even business. Borrowers take this up as they need to spread out the repayment over a good number of years, even if they are well within the means of borrowing such hefty sums.

3. The interest rate

This feature is linked to the other two listed above. As you’re borrowing a large sum from the long term money lender for a relatively prolonged period of time, the company can afford to offer you better private money lending rates.

What are the 3 common types of long term loans in Singapore?

1. Home loan

This is fairly self-explanatory. It is a long term loan that almost everyone in Singapore takes up, whether they’re buying a Housing & Development Board (HDB) flat or a private home. This is a secured loan because your home is used as collateral in case you default on your debt. Home loans from banks or long term money lenders are typically refinanced regularly by borrowers.

2. Car loan

This type of long term loan is used to finance the purchase of an automobile, which is especially important because of how expensive cars are in Singapore. The maximum amount you can receive for the loan depends on the car’s open market value. What’s more, the down payment needs to be paid in cash. You can’t use your CPF account here, unlike when buying a home.

3. Study loan

Tuition fees for tertiary education can easily hit the high five- or six-digit range, which in most cases requires a study loan. This particular type of long term loan usually offers borrowers three ways to make repayments:

1. Repay the principal amount with interest while you’re studying. This is akin to how a personal loan functions.
2. Repay only the interest while you’re studying. Once you graduate, you repay the interest and the principal amount.
3. Repay the interest and principal amount only after graduation. Interest doesn’t accrue while you’re studying for the MOE Tuition Fee Loan.

Where can you obtain long term loans from?

This depends on the loan that you wish to apply for, although long term money lenders do grant applicants personal and business loans across prolonged tenures. With that being said, this applies to almost every bank in Singapore as well. However, did you know the government offers several long term loans too? These include:

HDB housing loan

You can fund your home purchase via this loan directly from the HDB. Although it comes with stricter borrowing conditions as compared to loans from financial institutions, it allows you to repay fully via your CPF. This includes the home’s down payment.

CPF Education Loan Scheme

The funds from your CPF Ordinary Account (CPF-OA) can be used to settle the tuition fees at several institutions approved by the CPF Board. What’s more, you can even use your CPF-OA to pay for your children, spouse, sibling, or relative’s tuition fees at these institutions.

However, you’ll have to start repaying the principal amount and interest to your CPF-OA a year after graduation.

Are there long term money lenders that you can work with in Singapore?

Definitely! Legal money lenders in Singapore are more than willing to issue loans with long term payments, especially if you can prove that your credit history is good and that you’re drawing a stable income.

If you need funds for a milestone purchase like a car, look no further than R2D Credit. We’re an established licensed lender offering a range of convenient long and short term loans for individuals and businesses, from medical loans to SME loans in Singapore. There are benefits to choosing a private lender like us.

Get started with your application here, and our friendly loan officers will contact you with a personalised quote as soon as possible.