The longer the term of a loan—the time it takes to pay off the loan—the greater the total interest you will pay. For example, consider a $2,000 loan with two different loan lengths:
|Loan amount||APR||Length of loan||Interest paid||Total cost of loan|
With the one-year loan, you would pay $200 in interest (in addition to the principal
of the loan), for a total of $2,200 owed at the end of the year.
With the two-year loan, you would pay $400 in interest (in addition to the principal of the loan), for a total of $2,400 owed at the end of the second year.
So, in this example, taking a two-year loan instead of a one-year loan would double the interest you would pay.