Definition
How long you have to repay a loan: 60 months on a car loan, 15 or 30 years on a mortgage. For the same amount and rate, a longer term means a smaller monthly payment, slower principal payoff, and more total interest.
Why it matters
Term is the lever lenders pull to make any purchase feel affordable: stretching it shrinks the payment while growing the true cost. Comparing loans by monthly payment alone hides this; total interest over the term is the honest comparison.
Example
On a $300,000 mortgage at 6.5%, the 30-year term costs about $1,896 a month and roughly $383,000 of lifetime interest; the 15-year term costs about $2,613 a month and roughly $170,000. The smaller payment buys breathing room and costs about $213,000.
Put it into practice
Related terms
This definition is educational, not financial, legal, or tax advice. U.S. rules and limits change; verify time-sensitive details with official sources. See our disclaimer.