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The shortest you can comfortably afford. A longer term always costs more in total, and the difference is larger than most people expect.

One exception is worth naming: if the rate is very low and you would genuinely invest the difference at a higher return, a longer term can make sense. That only works if you actually invest it.

More than the amount itself, because every extra dollar goes entirely to principal and removes all the future interest that dollar would have accrued.

The effect is strongest early, while the balance is large. Check first that the loan has no prepayment penalty, which is uncommon but not extinct.

Because interest is charged on the outstanding balance, and that balance is at its largest at the start.

The split shifts every month as the balance falls. On a long loan this takes a surprisingly long time: see the amortization page for how slowly.

APR for comparing loans, because it includes fees. The note rate for calculating the payment, because that is what the payment is based on.

Where a loan has no fees the two are identical. Where they differ, the gap is exactly what the lender's fees cost you.

It lowers the amount borrowed, so it lowers both the payment and the total interest. On some loans it also improves the rate or removes insurance requirements.

The counterweight is liquidity. Emptying your savings to reduce a loan leaves you borrowing again, probably at a worse rate, the next time something goes wrong.

Contact the lender before you miss it, not after. Most have hardship options such as deferment, forbearance or a modified schedule, and they are far more willing to use them before a default.

Federal student loans have the strongest protections of any consumer debt, including income-driven repayment. Those options disappear if the loan is refinanced privately.

The lender does, but inside a market it does not control. The Federal Reserve sets a target for the federal funds rate, banks set their prime rate from it, and most variable consumer lending is priced as prime plus a margin.

Mortgages are the exception: they track long-term bond yields rather than the Fed directly, which is why mortgage rates sometimes move the opposite way to a Fed announcement.

Your individual rate is then set by that lender from your credit, the loan type and the term. Two lenders on the same day will quote you differently, which is the whole argument for shopping around.

A fixed rate never changes, so the payment is predictable for the whole term. A variable rate is an index plus a fixed margin, so it moves when the index does. Most US variable lending now references SOFR or the prime rate.

Fixed costs slightly more at the start and removes the risk. Variable starts cheaper and gives you the risk.

The test worth applying: could you still afford the payment if the rate rose two or three points? If not, the cheaper variable rate is not actually cheaper, it is a bet.

A secured loan is backed by an asset the lender can take if you stop paying — a house on a mortgage, the car on an auto loan. An unsecured loan has no collateral, which covers credit cards, most personal loans and student loans.

Security is why the rates differ so much. A mortgage is among the cheapest borrowing available and a credit card among the most expensive, for the same borrower on the same day.

The trade is what happens if things go wrong. Defaulting on unsecured debt damages your credit; defaulting on secured debt can cost you the asset.

It is usually the single biggest factor within your control. Scores run 300 to 850, and lenders price in bands, so crossing a boundary can move your rate more than the points suggest.

The score is built mostly from paying on time and how much of your available credit you are using, then length of history, recent applications and credit mix.

Before applying for anything large, check your reports from all three national bureaus. Errors are common, disputing them is free, and a corrected report is the cheapest rate reduction there is.

Instalment loans have a fixed payment and an end date: mortgages, car loans, personal loans, student loans. Revolving credit has no end date and a payment that varies with the balance, which is how credit cards and lines of credit work.

Within instalment loans the useful split is secured against unsecured, and fixed against variable. Those two questions tell you most of what you need to know about any loan before looking at the rate.

Rarely, for personal borrowing. Mortgage interest is deductible if you itemise, and student loan interest has a separate deduction that does not require itemising.

Interest on credit cards, car loans and personal loans is not deductible at all. Since the standard deduction roughly doubled in 2018, most filers do not itemise, so even the mortgage deduction goes unused.

The Consumer Financial Protection Bureau writes and enforces the main consumer lending rules, including the Truth in Lending Act, which is why every offer must disclose an APR in a standard form.

Beyond that it is layered: banks are supervised by the OCC, the Federal Reserve or the FDIC depending on charter, credit unions by the NCUA, and state regulators license and supervise non-bank lenders. Usury caps are set state by state, not federally.