3 interesting facts about longer-term loans
What does a longer loan term mean?
We have noticed that most investors tend to choose consumer loans with a term shorter than 84 months. However, this makes it significantly harder to “catch” a loan, as shorter-term loans attract more automatic investment profiles.
If you are still considering whether it’s worth investing in longer-term loans, here are three interesting facts that may change your perspective.
1. Long-term loans are repaid earlier
All long-term loans (≥84 months) that have already been repaid did not reach their full term — all were repaid early. This means that the actual loan term was shorter than stated in the contract, allowing investors to get their funds back sooner.
2. Long-term loans are a safer choice
Among longer-term loans (≥84 months), we have not lost a single one. The likelihood of entering legal recovery is also twice as low: for short-term loans (up to 84 months), this probability is about 8.38%, while for longer-term loans, it is only 4%.
3. Longer term = more interest earned
With the same investment amount and interest rate, a longer-term loan generates more interest. Why? For example, if you invest €100 at a 12% interest rate in two loans — one with a 36-month term and the other with a 108-month term — and both loans are repaid within 24 months, the longer-term loan would earn, on average, 32.7% more interest.
This is due to the annuity repayment method: the monthly payments are always the same, but at the beginning, a larger portion of the payment is made up of interest, and later, of the principal. For this reason, longer-term loans generate more interest at the start.
• A 36-month loan repaid in 24 months earns €17.08 in interest.
• A 120-month loan repaid in the same period earns €22.66 in interest — that’s 32.67% more (+€5.58).
Experienced investors evaluate loan choices comprehensively — they don’t choose a loan based solely on its term. They know that longer-term loans not only allow them to invest for a longer period and deploy capital faster, but also earn more and diversify their portfolio with lower risk.