I am taking out a personal loan to consolidate debts from various sources into one payment at a lower APR.

The loan company lets me choose 24, 60, 72, etc. months to repay on the application. I can't know the APR I'll get until after submitting the application. Does choosing a longer term typically mean the lender will set it at a higher APR?

  • Mathematically APR is a function of interest rate, compounding frequency, and fees like points that count as interest. Usually compounding frequencies are the same for all loans from the same company. Usually companies quote their going rates and points at least by general category for each type of loan. An unwillingness to do so is somewhat suspicious for all but the lowest tier subprime lenders.
    – ohwilleke
    Feb 24, 2022 at 20:12
  • Is this your only option? Are you getting at least a range / max interest rate, that depends on the term but also your credit rating?
    – stannius
    Feb 25, 2022 at 17:03

2 Answers 2


Yes, typically longer term loans have higher interest rates since it's more risk for the lender (among other reasons).

I would choose the shortest term loan that you can afford - you'll pay less interest AND get rid of the debt more quickly.


There's no "law of nature" that mandates a higher interest rate for a longer term loan, but companies do in fact charge a higher rate for a longer-term loan because research has shown that longer-term loans are riskier. Thus, higher rates are charged.

  • Note that this generally only applies to unsecured loans. For secured loans (mortgages, auto loans, etc.), longer terms usually have a lower APR (but a higher total interest).
    – Mark
    Feb 26, 2022 at 0:35
  • @Mark not according to bankrate.com/mortgages/mortgage-rates
    – RonJohn
    Feb 27, 2022 at 23:52

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