Personal loan terms can be as little as a few months, up to a few years. Generally, the larger your personal loan amount, the longer you will have to repay it. For example, a $500 personal loan may only have a repayment period of six months. While a $5,000 personal loan may need to be repaid in two years. Your specific lender can let you know precisely the maximum time they provide for their borrowers.
The length of a loan is an important factor to consider when deciding between personal loan options. When borrowing the same amount of money with the same interest rate, the longer a loan, the more interest you will pay, but your monthly payments may be lower. While a shorter loan with the same rates will mean less interest, but a higher monthly minimum payment due. You will want to pick a loan term that balances out what you can afford to pay every month and the amount of interest you will pay.
Another thing to keep in mind is that some lenders have prepayment penalties. This means that if you pay back your loan before the due date you will be charged a fee. For the most flexibility, try and find a lender that doesn’t have this as part of the loan contract, that way you can pay off your debt sooner if you want or need to.
Loan term is important when deciding on a personal loan, along with the interest rate, repayment details, and the lender themselves. Your interest rate will be the highest cost for the loan, and so pay close attention to that.
Repayment details include things like early payment fees, default terms, minimum balance information, late payment costs, and balloon payment information. This information will essentially be a guide of what your loan repayment will entail and allow.
And finally pay attention to the lender themselves. You’ll want to work with a lender that is credible, fair, and flexible. Check out past customer reviews, search for any complaints filed against them, and ask questions about things that don’t make sense.