The features and benefits of a seven-year personal loan
By stretching your loan out to a seven-year term, your repayments will come at the cheapest rate possible, allowing you more room to breathe month-to-month.
Because seven-year terms come with lower repayments, you can potentially borrow more than you otherwise could, all the way up to $75,000.
Not only can you potentially borrow larger sums of money, but you can do so at a low rate, with offers from our panel of trusted Australian lenders helping you compare available deals.
Additionally, you can choose the frequency of your loan contributions, with monthly, fortnightly or weekly schedules all available for you to choose.
You can also compare lending options based on whether they enable you to pay above the minimum required amount to help you pay your loan off sooner.
Personal loans are fast to process, with instant outcomes within 60 seconds of your application and funds transferred directly into your account as quickly as one day thereafter.
No two personal applications are the same: each applicant will receive an interest rate tailored to their financial situation, rather than simply a general rate across the board.
Types of personal loan
With an unsecured personal loan, you can potentially borrow as much as $75,000 without the need to attach any valuable assets, such as your car, as security. These loans are the most widely available and often the quickest, with same-day approval possible.
Secured personal loans, on the other hand, make use of collateral. This lowers your risk profile in the eyes of a lender, potentially lowering your interest rate and expanding your borrowing power beyond what you may be able to get through an unsecured loan.
Variable interest rates remain open to fluctuation during your term. This means you can benefit from decreasing rates and save on your loan if the market heads in that direction, although you’ll also pay more if rates start rising.
Fixed interest rates are locked at the beginning of your loan and remain constant throughout your repayments. This acts as a valuable protection against interest rate increases, as your loan will be unaffected, but you’ll miss out on potential drops as well.
If you’re paying off multiple debts at the moment, particularly those with high interest (such as credit card debts), consolidating them into one payment can not only make them more convenient to manage but also potentially save you money overall.
Looking to take off on a holiday with your family but want to pay it off at your own speed? Travelling can be expensive, so you can distribute the cost of your next trip over a period you’re more comfortable with by taking out a personal loan to pay for it.
There are so many costs that go into making your dream wedding a reality, from venue hire to catering to dresses and suits and so much more. By taking out a personal loan, you can start planning the big day you want, even if you can’t pay for it upfront.
Home improvements are desirable for a range of homeowners to help keep their living space fresh and interesting, not to mention increase its value. You can get past the financial hit of renovations with a personal loan paid in instalments.
Personal loans aren’t limited to PAYG employees, though. If you’re running your own business, you can still be approved for financing by submitting tax returns and other alternative documents instead of payslips and utilise your funds however you wish.
There’s a variety of expenses which come with being a student, ranging from the cost of your courses, textbooks and computer to your accommodation. Taking out a personal loan can make these costs more manageable by spacing them out.
Some lenders offer green personal loans, which are designed to be used for energy-efficient appliances and products such as solar panel and air conditioning installation in your home. You can qualify for lower interest rates and fees with this loan.
Why compare personal loans through Savvy?
How to increase your approval chances for a seven-year personal loan
Apply for a larger loan
When it comes to personal loans in Australia, lenders won’t be willing to approve applications for small amounts over seven years. For example, an application to repay a $5,000 personal loan over seven years would be swiftly denied (although it wouldn’t be an overly wise financial decision regardless due to the fees and interest).
The seven-year term option is generally reserved for borrowers requesting a greater amount of money closer to the $75,000 maximum, so you’ll have a much better chance of being approved if you do so.
Common personal loan queries
More about long-term, seven-year loans
What are the main benefits of a seven-year loan term?
When considering which term length is best for the repayment of your loan, it’s important to look at the key advantages of each option. Fortunately, you can do just that with Savvy. We’re partnered with reputable lenders from around Australia to help give you the highest quality comparison for loans big or small, long or short. In terms of seven-year loan terms, some of the primary factors to consider are:
More manageable repayments
With a longer period over which to repay your finance agreement, the individual instalments you’re required to pay won’t be as expensive. This may be of particular benefit to you if you need a large personal loan but aren’t an especially high income-earner, as taking more time to repay your debt can free up funds elsewhere to help you juggle your other expenses. This is perhaps the most obvious benefit of opting for a long-term personal loan, particularly when borrowing a large sum, as lenders will want to ensure you can manage your repayments comfortably and consistently.
Flexibility to repay at a faster rate
Even if you lock in a larger loan over a long term of up to seven years, it doesn’t mean you’ll have to stick to that exact schedule. Most lenders these days won’t charge any fees for completing your loan payments early, which gives you the freedom to contribute above and beyond the minimum amount required each week, fortnight or month. The most significant benefit of this is that you can slash the amount of interest and fees paid throughout your loan, as well as the term itself. For example, you could repay a $50,000, seven-year loan at 8.5% p.a. in six years if you paid an extra $100 each month, saving over $2,500 in the process.
Am I better off applying for a shorter term?
In most cases, yes. There’s one main reason why it’s almost always better to repay your loan in as little time as you can manage: the added cost of interest and fees. Because of the way interest is calculated (daily based on your outstanding principal), you’ll end up paying a significant amount more interest on a longer term compared to a shorter one. With your principal reducing at a slower rate, so too will the amount of interest you’re required to pay. For instance, a $40,000, seven-year loan at 7.5% p.a. would cost over $11,500 in interest alone. However, repaying the same loan over five years, while increasing your repayments by almost $200 per month, will only result in an outlay of just under $8,100, representing a saving of more than $3,400.
By that same token, fees can add up more across a long-term loan. While your establishment fee likely won’t change (which can cost between $0 and $595), any ongoing monthly charges could prove significant. Even though they’re a seemingly insignificant cost, $10 each month over seven years adds up to an extra $840 paid for the pleasure of borrowing funds. This is, of course, before any interest is factored into your loan’s cost, meaning you could be staring down the barrel of a total outlay well above $10,000 as part of your agreement.
The other element to consider is whether you want to saddle yourself with debt for such a long period. It may be the only option for lower income-earners who don’t have as much disposable income to play with, but it goes without saying that it’s better to be in as little debt as possible at any given time. By extending your loan term to seven years, you may restrict your ability to take out a loan a few years down the track should you need one. While it’s possible to have more than one personal loan on your books at any given time, the likelihood of finance approval is decreased substantially.
Ultimately, though, whether a shorter loan term is better for you will depend almost entirely on your financial circumstances. It’s important to have a firm grasp of your situation before diving into the application process, so you can use Savvy’s borrowing power calculator to give you an estimate of how much you might be able to borrow over different term lengths.
How else should I compare seven-year loans?
There are many ways beyond the term of your loan which you should look at when deciding on which is best for you. With Savvy, you can find all the key information you need to make an informed call on which finance deal is best for your needs. The main factors to consider include:
Making sure you qualify for the loan you’re looking at is the first step towards securing financing. Each lender will have slightly different requirements, so it’s crucial to find a lender whose criteria you can meet. The general eligibility points which tend to apply to personal loans are:
- You must be at least 18 years old when you apply
- You must be a permanent resident or valid visa holder
- You must be holding stable employment
- You must be earning at least $20,000 annually from stable sources
- You mustn’t have any history of defaults or bankruptcy
Interest and fees
As mentioned above, interest and fees can make a significant difference to your loan repayments. Even small differences in rates can have an impact on the cost of your loan. A $45,000, seven-year loan at 9% p.a. would cost $15,817 in interest but selecting a loan at 8% p.a. instead would save you almost $2,000. Similarly, selecting a loan with a $5 monthly fee instead of $10 would save you more than $400 over a seven-year term in itself.
Available loan amounts
Of course, you’ll need to ensure your lender can accommodate the size of the loan you’re looking for. While many cap their loans at a maximum of $50,000, there are lenders today who can approve you for amounts of up to $75,000 without the need for security. If you want to take out a larger loan such as this, you’ll need to compare your options thoroughly and make sure you find one which offers the amount you need before proceeding.
You may also look to capitalise on a variety of loan features offered by your lender. An increasingly common added option on personal loans is the ability to redraw from additional payments made across your term. This saves you from having to apply for another loan while you’re still repaying your current one to access the funds you need, albeit it can cost you more and extend your term back out to seven years. You should also seek out the ability to choose between weekly, fortnightly and monthly payments in line with your preferred frequency.
How do I calculate my loan repayments?
There are several variables which go into determining the cost of your repayments, namely your loan amount, term length, interest rate, fees and payment frequency. Your lender will let you know how much your instalments would be on your loan before you sign your final contract, but there are ways to estimate the value without entering the application process. You can use Savvy’s loan repayment calculator to give you an idea of what the repayments on your loan might look like, as well as its overall cost. When doing so, you should input your loan’s comparison rate to give you a more accurate idea of what the deal might cost you month-to-month and overall.
Helpful personal loan guides
Still looking for the right personal loan?
Personal loans come in all shapes and sizes, so read more about the ways you can use them, as well as how they might work for you.