How to Choose the Best Personal Loan Term Length

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- Personal loan terms typically range from two to seven years.
- A shorter repayment period lowers total interest costs, while a longer term means lower monthly payments.
- Choose a repayment term that balances affordable monthly payments and low interest costs.
What is a common personal loan term length?
How term length affects personal loans
Loan details
Your loan estimate
Monthly payment
$212.47
$10,000
$2,748.23
$12,748.23
06 / 2030
Show amortization schedule
How to choose between shorter and longer loan terms
- You want to pay off the loan fast.
- You want to save money in interest.
- You can afford a higher monthly payment.
- You’re borrowing a small amount of money.
- You want to keep monthly payments low for the full loan term.
- You’re borrowing a large amount of money and need a longer time to pay it off.
What to consider when choosing a personal loan term
How to get a personal loan
- Check your credit. Lenders typically use credit score, credit history, income and existing debts to determine if a borrower qualifies for a personal loan. Get a copy of your credit report before applying for a loan to understand what’s influencing your score. You can get your report for free at annualcreditreport.com or on NerdWallet. Dispute credit report errors that could be dragging your score down, such as an incorrect balance on a credit account.
- Review your budget. Examine your cash flow to see what size monthly payment you can afford. Use a personal loan calculator to determine the loan term and APR that would give you affordable monthly payments.
- Pre-qualify. Many lenders let you pre-qualify for a personal loan with no impact to your credit score. Pre-qualifying shows the likelihood of loan approval, plus it gives an estimate of your loan amount, APR, loan term and monthly payments.
- Compare offers. Once you’ve pre-qualified with multiple lenders, compare offers to see which best fits your needs. Use APR for an apples-to-apples comparison of the cost of the loan.
- Apply. When you’re ready to accept a loan offer, you’ll submit a formal application. You’ll likely need to show documents to verify your identity and income, and the lender will run a hard credit check, which will cause a temporary dip in your credit score. If approved, most lenders will send funds within a week. Some lenders can fund a loan the same or the next day after you’re approved. Your first payment is typically due about 30 days later.
How long do you usually have to repay a personal loan?
Can you get a 10-year personal loan?
Can you change your personal loan term length?
Can you pay off a personal loan early?
Article sources
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