Loans Guide
Loan Term vs Interest Cost
Choosing a longer loan term can reduce your monthly payment, but it often increases the total interest you pay over time. A shorter loan term usually means higher monthly payments and lower total interest.
Shorter loan term
A shorter loan term spreads repayment over fewer months. That usually increases the monthly payment, but it reduces the total time interest can accumulate.
Longer loan term
A longer loan term lowers the monthly payment by spreading the balance across more months. However, because the loan stays active longer, the total interest paid is often much higher.
What borrowers should compare
Instead of looking only at the monthly payment, compare both the monthly affordability and the total cost over the full loan term.
Try the loan calculator
Test different loan terms in the calculator to see how the monthly payment and total interest change.
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