The length of time from when you take out a loan to when it is required to be paid in full. Depending on the loan, this could be as short as a few months or as long as 30 years.
A loan's term, along with its interest rate and the amount to be borrowed, dictate the monthly payments you'll be required to make. A shorter-term loan will cost less overall given that you will be incurring less interest than with a longer loan of the same amount, but it will come with higher monthly payments given that you must pay off the same balance in a shorter period of time.
Potential borrowers must balance the desire to become debt free and truly own whatever it is they plan on taking out a loan to buy with monthly affordability. In other words, the ideal loan term will translate to monthly payments that are affordable even if everything does not go to plan but will not result in you paying off what you owe for longer than you will benefit from the item you wish to purchase, whether it be a house, a car, etc.
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