ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In general, the longer your loan term, the more interest you will pay. Loans with shorter terms usually have lower interest costs but higher monthly payments than loans with longer terms.

Detailed explanation-2: -A longer term is riskier for the lender because there’s more of a chance interest rates will change dramatically during that time. There’s also more of a chance something will go wrong and you won’t pay the loan back. Because it’s a riskier loan to make, lenders charge a higher interest rate.

Detailed explanation-3: -The length of the loan: Lenders make more money from long-term loans than short-term ones because the debt has more time to accrue interest. As a result, they offer lower rates for longer-term loans.

Detailed explanation-4: -Because unsecured loans are not backed by collateral, they are riskier for lenders. As a result, these loans typically come with higher interest rates.