Need to borrow money, but aren’t sure what personal loan repayment term to choose? Learn more about short vs. long personal loan terms. (Shutterstock)
Personal loans have repayment terms that typically range from 12 to 60 months, or sometimes longer. But short-term personal loans are also available, with some terms as short as a few weeks up to 12 months.
A longer loan term leads to lower monthly payments but higher interest costs. If you’re looking to save on interest, you may prefer a short-term loan, even if the repayment schedule is a bit aggressive.
Here’s more insight into short versus long personal loan terms as you decide which one might be right for your situation.
Credible makes it easy to compare personal loan rates and different loan terms from various lenders, all in one place.
Personal loans with shorter terms have several pros to consider, including:
Short-term loans can also have a few drawbacks you’ll want to keep in mind:
Long-term loans come with several benefits, including:
If you’re looking for a loan with flexible repayment terms, Credible makes it easy to see your prequalified personal loan rates, without affecting your credit score.
Before you take out a loan with a longer term, keep these potential drawbacks in mind:
Not sure if a short-term loan or a long-term loan is right for you? It can be hard to make this call, but looking at the numbers can help make the decision easier. The first thing you’ll want to consider is how the personal loan term will affect your monthly payment amount and how much interest you’ll pay over the life of the loan.
For example, say you take out a $5,000 loan with an 11% interest rate. Here’s how your loan term can affect how much interest you’ll pay:
These potential savings are great, but only if you can afford the monthly payments of the short-term loan. You can use Credible’s personal loan calculator to get a better idea of what personal loan term might work for you.
It can help to shop around for both short-term and long-term personal loans with different lenders before making a decision. Personal loan lenders offer different loan amounts, interest rates, fees, and repayment terms, so comparison shopping can help you make sure you’re getting the best loan and repayment terms for your financial needs.
If you’re ready to apply for a personal loan, Credible lets you quickly and easily compare personal loan rates to find one that suits your needs.