Once you’re approved for a loan, you can expect to owe your lender your principal, or the amount you borrow, as well as interest and fees to cover the application and credit check processes. Lenders are required to publish the loan’s annual percentage rate (APR), which accounts for both annual interest and fees in one figure.

The term of the loan, or the length of time you have to pay back the full loan, is an important factor in keeping your cost as low as possible. A shorter term means you’ll make fewer, but larger payments. However, it also means that you’ll be paying interest for fewer years, which will bring your total cost down.

For example, suppose you borrow $10,000 at 10% interest in order to purchase a car. You would pay $322.68 per month on a three-year loan and $212.48 on a five-year loan. But the total cost of the three-year loan would be $11,590, whereas the total cost of the five-year loan would be over $12,700.