A long-term loan in Singapore refers to a loan that is paid off over an extended period of time, mostly ranging between 3-30 years. It is generally considered to be a loan with a longer repayment period, mostly above three years.
The loan is most ideal for borrowers who want to borrow a huge amount of money and keep the monthly installment low.
Long-term loans are mostly used to finance transactions such as; capital investment, working capital, purchase of machinery, vehicle, land, building, etc.
Features of Long term Loans
High loan amounts
Long-term loans generally come with high loan amounts as compared to short-term loans. Since most of these loans are secured, the lender is not at any risk whatsoever for advancing hefty loan amounts. You get as much as you want as long as you can pay.
Attractive interest rates
Due to the quantum of the loan and the long tenure involved, the interest rates tend to be lower than other types of loans. Also, the stiff competition among the lenders in the name of attracting corporate clients lowers the interest rate.
Collateral submission
Most long-term loans are secured, this is because they carry huge amounts that are spread for a long period. The security safeguards the interest of the lender in the event of default. They reduce the risk of default by the borrower. In case the borrower is not able to pay the loan, the lender may repossess the security to close up the loan.
Equal monthly installments
The loan is spread into equal monthly installments over a specific period of time. This can be from 3 to 30 years. The monthly installment comprises of principal amount and interest rate.
Tax benefits
Some long term loans such home loan has tax benefits. They benefit from a tax rebate that is subject to law under the Income Tax Act.
Why apply for a long-term loan?
- They offer competitive and low-interest rates due to the high amount borrowed and the long tenure.
- It maintains one’s liquidity position as the loan is spread over a long period of time hence a lower monthly installment.
- The loan is flexible as it can be personalized from applicant to applicant. Also, the terms can be negotiated where the documentation and credit history are in order.
- It comes with tax benefits.
- It offers huge amounts that cannot be obtained through other loan options.
- Coincides with long term strategy, thereby allowing the company to align its capital structure with its long term
If you are looking forward to financing a big project, look no further, long-term loans are the way to go. You’ll have your project financed and remain liquid. Long-term loans tend to safeguard your liquidity position. Follow this link for all your financial needs.
