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17 April, 18:16

What is the correlation between term length of a loan and interest paid?

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  1. 17 April, 20:22
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    There is a positive relationship between the length of a loan and its interest paid

    Explanation:

    A positive relationship exist between the length of a loan and the interest paid. A higher interest will be paid for a longer time period. This is so because the lender is giving out a sum of money for more than the average time period, hence the interest must be increased appropriately too.

    Hence, the shorter the repayment time for a loan, the lowest the interest and vice versa.
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