The Term of Your Loan

The term of your loan is the time it takes to repay both the principal and the interest. The loan term has a major effect on how much you end up spending to pay off the loan. A shorter term will generally reduce the cost. A longer term will generally reduce the amount you pay each month, but increase the overall cost.

Fortunately, you aren’t stuck with a fixed loan term. If you’re having trouble repaying your loan, you can usually extend the term and lower the amount of your payments. And, if you find that you can pay off your loan faster, you can add an extra amount to each month’s regular payment. (Just be sure to indicate to the lender that the extra payment should be applied to the loan’s principal.)

Basically, repayment is a trade-off between paying less each month or paying less overall. Keep that in mind when you review your repayment options. To compare payment plans and find out how long it will take to pay off your current loans, try the “How long until my loan is paid off” calculator.

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