The Best Term Length for a Personal Loan

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Personal loans are a form of unsecured credit, which means it does not need any mortgage of an asset like a car or house. Instead, lenders assess your creditworthiness to determine whether to approve your loan and how much interest to charge. The average annual percentage rate on a two-year personal loan was 10.22% as of April 2019, according to NerdWallet's loan rate analysis.


There is no one-size-fits-all answer to this question the best term length for a personal loan application depends on your unique financial situation.

However, in general, short-term personal loans are better than long-term loans. It is because shorter terms mean lower interest rates and lower overall payments. Conversely, long-term personal loans may initially seem like a good idea because they lower your monthly payments, but you will pay more interest over the loan tenure.


When considering personal loan terms and conditions, compare offers from multiple lenders. Ensure that you look at the interest rate, the term length, and the overall cost of the loan. It will help you look for the best deal for your needs.

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