Check out this example: with the longer-term loan, the total cost is more than $1,100 higher because you’re paying more in interest.
Loan amount of $10,000 and 10% Annual Percentage Rate (APR)
|About the loan||Loan A||Loan B|
|Term||25 months||49 months|
|Total cost of loan||$11,106||$12,215|
|Total interest paid||$1,106||$2,215|
*Please note: the final month’s loan payment may vary from the regular monthly payment.
Note: Lenders will often offer you options for the term. You might consider a longer term loan to get a lower monthly payment that you can comfortably manage to pay, but always check the total cost of the loan.
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