Should you get a 7-year loan?
Should you get a 7-year loan?
Deciding to take out a loan is a big decision. It must work for you both short term and long term, so do your research to find the best option for you. You need to know how much you want to borrow, how long to borrow it for and be aware of interest rates and repayments too.
You may take out a loan to get on the property ladder. You might use it to buy a new car or fix up your property. Whatever your goal, a 7-year loan could help you achieve it. But before you submit your application, it’s always a good idea to check your eligibility first – it won’t affect your credit score.
What is a 7-year loan?
A 7-year loan is something you borrow and repay to your chosen lender in that timeframe. This timeframe is known as a ‘loan term’ and during this period you will typically pay back what you borrowed in fixed monthly repayments. You can also apply for different lengths of loans. But it all depends on your needs, income and ability to repay.
What's the most I can borrow with a 7-year loan?
You could potentially take out a loan to buy what you need without borrowing too much and putting yourself under financial strain. Choosing to spread a loan over seven years gives you enough time to suitably and sensibly manage your repayments.
A secured 7-year loan can allow you to borrow up to £100,000. Smaller amounts are available, you can borrow from £5,000 if that is how much you require. The amount you can borrow depends on your individual circumstances and affordability.
It’s important to keep up with your monthly repayments to avoid additional charges or negative impact on your credit score. You also have the option to make higher repayments to reduce the interest over time.
What are the pros and cons of 7-year loans?
By looking at the pros and the cons, you can decide whether a 7-year loan is the best option for you. When making the comparison to shorter-term loans or other longer-term loans, such as 15-year or 20-year loans, considering pros and cons will help you make a well-rounded decision.
Pros
- Pay less interest during the loan term: 7-year loans are in the middle range of longer-term loans. This often means that less interest is paid during the borrowing period.
- Boost your funds: When you compare a loan of this length to shorter-term loans, you often have the potential to borrow more money giving you greater financial options.
- Potentially improve your credit score: Making repayments on time over the loan term may positively influence your credit score.
Cons
- Potentially higher monthly repayments: Borrowing over a shorter timeframe than 15- or 20-year loans could mean your monthly repayments are higher on a 7-year loan.
- Early repayment penalties: Some lenders add charges to your loan for paying it off earlier than the agreed term. This can be around one or two months’ worth of interest but will be explained in your terms and conditions.
- Still a large financial commitment: Even though it’s shorter than a 15-year loan, a 7-year loan still represents a big financial commitment, requiring sustained income over a number of years to pay it off.
What rates are available on 7-year loans?
Whether you decide to apply for a secured or unsecured loan, the interest rate you are offered will vary depending on many factors, including:
- Your credit score and history
- The amount of money you choose to borrow
- The type of loan
- The value of your property that you use as security (only applicable to secured loans)
- The lender’s rates and policies, which are likely to differ
- The length of your loan term
Am I eligible for a 7-year loan?
To simplify your loan application process, check out your eligibility criteria before you apply. To be eligible for a 7-year loan, you typically must:
- Be a homeowner
- Be aged between 21 and 70
- Live in the UK
- Be able to afford your repayments based on your income
Checking your eligibility with Evolution Money won’t affect your credit score.
Apply for a 7-year loan with Evolution Money today!
If you are looking to borrow money for a house renovation or to buy a new car, our 7-year loans could be be an option. Start by checking your eligibility with us today – it won’t impact on your credit score.
All loans are subject to status and affordability checks. Terms and conditions apply.
We have lots of helpful guides on everything finance-related, so why not check out our help and advice hub while you’re here?
Representative 28.96% APRC (Variable)
For a typical loan of £26,600 over 180 months with a variable interest rate of 19.56% per annum, your monthly repayments would be £484.00. This includes a Product Fee of £2,660.00 (10% of the loan amount) and a Lending Fee* of £763.00, bringing the total repayable amount to £87,030.00. Annual Interest Rates range between 11.7% to 46.5% (variable). Maximum 50.00% APRC. *Lending Fee varies by country: England & Wales £763, Scotland £1,051, Northern Ireland: £1,736.
Think carefully before securing debts against your home may be repossessed if you do not keep up repayments on your mortgage or any other loan secured against it. If you are thinking of consolidating existing borrowing, you should be aware that you may be extending the terms of the debt and increasing the total amount you repay.
