Smart Borrowing: Should You Choose a 12, 24, or 36-Month Loan Term?

When considering a consumer loan, one of the first—and most important—questions to ask is: What loan term should I choose—12, 24, or 36 months?
While it may seem like a simple choice, your decision will directly impact your monthly cash flow and the total cost of the loan.

How does the loan term affect your finances?

In general, a longer-term results in lower monthly payments, making it easier to manage short-term expenses. However, it also means you’ll pay more in total interest over time.

Conversely, a shorter term helps you repay the loan faster and save on interest, but it requires a higher monthly payment.
For example, with a loan of VND 30,000,000:

• A 12-month term means higher monthly payments but lower total cost
• A 24- or 36-month term reduces monthly pressure but increases the total interest paid

Match the loan term to your financial situation

• 12 months: Ideal if you have stable income and aim to pay off the loan quickly
• 24 months: A balanced option for managing monthly cash flow
• 36 months: Suitable if your income varies or you need to allocate funds to other expenses

Choosing the right term not only helps you stay in control of your finances but also contributes to building a strong credit profile for future borrowing.

Transparency makes decisions easier

Reputable financial institutions like Shinhan Finance provide clear and detailed repayment schedules, including principal, interest, total cost, and monthly payments for each term. This helps you compare options and make informed decisions.

You should also inquire about low-interest loan programs, which can significantly reduce your total borrowing cost—especially if you opt for a longer term.

There’s no “best” loan term—only the one that fits you best

Smart borrowing isn’t just about choosing the shortest or longest term. It’s about understanding your repayment capacity, having a clear financial plan, and knowing how soon you want to pay off the loan.

When your loan term matches your financial reality, that’s when borrowing becomes safe, sustainable, and truly smart.