A loan with a shorter term will typically have what characteristics?

A loan with a shorter term will typically have higher monthly payments and less total interest paid over the life of the loan. This is because the principal balance is repaid over a shorter duration, resulting in larger monthly installments. The lender receives their money back faster, which reduces the amount of interest that accrues compared to a longer-term loan where payments are spread out over a more extended period. Additionally, with shorter loan terms, lenders generally charge lower interest rates as there is less risk involved; the money is paid back in a shorter time, decreasing their exposure to potential default.

In contrast, lower monthly payments and higher total interest paid are generally characteristics associated with longer-term loans, where over time, interest accumulates more significantly due to the extended period of repayment.