When you take out a loan, one of the key things to consider is the loan term. Put simply, this is how long you’ll have to pay the money back. Loan terms can vary depending on the type of loan, how much you’re borrowing, and what feels manageable for your budget.
At ClearScore, we want to make this simple so you can make the right choice for your situation.
A loan term is the agreed period of time you’ll be making repayments to your lender. For example, this might be 12 months, 3 years, or even 7 years depending on the loan.
Shorter loan terms usually mean higher monthly repayments but less interest overall
Longer loan terms usually mean lower monthly repayments but you’ll pay more interest in total
It’s about finding the balance between what you can comfortably afford each month and the total cost of borrowing.
The length of your loan term affects:
Monthly repayments – a shorter term means bigger monthly payments, a longer term means smaller ones.
Interest costs – the longer the loan, the more interest you’re likely to pay.
Flexibility – some loans allow you to make extra repayments or pay off early, but always check for early repayment charges.
When deciding on a loan term, think about:
Your monthly budget – can you comfortably cover the repayment without stretching yourself?
Your long-term goals – do you want to clear the debt quickly, or spread it out for more breathing room?
Total cost – would paying a little more each month save you money on interest?
It might help to use a loan calculator to see how the term affects your repayments.
At ClearScore, you can see personalised loan offers with your chances of approval before you apply. This means you can compare loan terms and repayments without harming your credit score. Explore your loan options with ClearScore.
Your loan term has a big impact on both your monthly repayments and the total cost of borrowing. By weighing up your budget, goals, and repayment preferences, you’ll be in a strong position to make the choice that works best for you. With ClearScore, you can compare your options and feel confident you’re choosing a loan term that fits your life