Which term should you choose? Shorter terms mean higher monthly payments but dramatically less interest.
A $200,000 loan over 36 months costs $27,286.27 in interest — vs $66,052.96 over 84 months.
That's a difference of $38,766.69 for the same loan.
How Is the Monthly Payment Calculated?
All figures use the standard amortisation formula: M = P × [r(1+r)^n] / [(1+r)^n - 1], where P = $200,000 principal, r = monthly rate (8.5% APR / 12), and n = term in months. Every payment covers interest accrued that month plus a portion of principal — with the interest share decreasing each month.