Definition
The length of time you have to repay a loan. Shorter terms typically mean higher monthly payments, while longer terms lower them but may cost more in interest.
What to consider
- Shorter terms mean higher payments but less overall interest.
- Choose a term that fits comfortably within your budget.
- Review the total cost of the loan before deciding.
Real world scenarios
- Jasmine chooses a shorter 10-year loan term for her small business, reducing total interest but raising her monthly payments.
- Miguel’s 30-year mortgage lowers his immediate housing costs, though he understands he’ll pay more interest overall.
- Extending the loan term helps Becky manage monthly expenses but she stays mindful that the debt persists longer.
Related terms
Related Playbooks
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