What does the loan term refer to?

The loan term specifically refers to the time frame during which a loan agreement remains effective and obligations are to be fulfilled. This duration determines how long borrowers have to repay the loan, which can range from a few months to many years, depending on the type of loan and specific lender terms. Understanding the loan term is crucial as it affects monthly payment amounts and overall interest paid throughout the life of the loan.

In contrast, the other options focus on different aspects of borrowing. The maximum amount of money you can borrow pertains to your creditworthiness and lender policies, not the period of the agreement. The interest rate applied on a loan refers to the cost of borrowing expressed as a percentage, shaping how much you will pay over time but not when payments occur. The total cost of borrowing money encompasses the full repayment amount, including principal and interest, but again does not relate to the duration of the loan.