The Importance of Loan Tenure in Personal Loans
Loan Tenure is the term or the period in which you need to pay your debts. It’s a fixed time that your lender provides for your loan repayment. It also applies to personal loans just like we see in other loans like education loans, car loans, home loans etc. Personal loan tenures may vary from one lender to another. You should know the rate of interest with terms for the repayment as these things matter the most for managing your financials. Some choose short-term repayment periods but quick recovery of loan repayments while some choose longer tenure and have high interest rates. If you are choosing a short-term Personal loan, then you should also check for the loan tenure and confirm with your lender.
Here, in this blog, you will know the importance of loan tenure for your Personal Loan. Follow all the steps carefully:
Factors Affecting Loan Tenure for Personal Loan
Typically, when you are about to apply for a secured or unsecured loan, your banking institution will give you a loan repayment tenure in which you need to pay all your debts and EMI. These factors affect your loan tenure which you should know:
Income and Employment
The source of income and employment matters the most and decides your loan repayment terms. For example: if you choose a short tenure, you have to pay a higher interest rate or EMI. So, it becomes very necessary to access your monthly salary or income to check whether you can afford high EMI when you have provided a short term.
Amount of Loan
While taking or borrowing a loan, it becomes very necessary to access your loan requirement in the form of financial need. It is because your loan amount directly affects your repayment tenure. If you take a big loan amount, then you have to pay a larger repayment in the specific term. Choosing a shorter tenure for a big loan amount will result in a big EMI. So, it becomes very necessary to evaluate your loan amount and the need for the amount and make sure whether you can easily sustain a higher payment. Smaller loan amounts can be easily paid in a shorter tenure. For big loan amounts, a larger tenure is beneficial as it helps to manage your daily financial crisis and mental stress.
Existing Liabilities on Your Loan
You need to ensure that you can manage your loan amount with add-on expenses like rent payments, home utilities, educational expenses and other household chores. Sit relax, think and consolidate your expenditures and make sure that you can afford to pay your loan amount with incurred EMI or not. Make a wise decision and then borrow either a short-term Personal loan or a long term.
Use Loan EMI Calculator
If you are confused about what amount you have to pay in a particular tenure or loan term, you can easily use the loan EMI calculator online. It will show you how much will be your expected EMI based on your debt repayment term and rate of interest. These things will help you select the best loan for your needs. For instance, if you’re looking for the best housing loan in Chennai, choosing a lender that offers flexible tenure options can help you manage your repayments more effectively while keeping interest rates manageable
Importance of Using The Correct Loan Tenure
Choosing the right loan tenure will help the borrower to handle your financial status wisely which helps you get rid of various types of mental stresses. Here, you will know the benefits of opting for the right loan tenure:
- Loan tenure helps you to save on your interest rates fixed for the entire tenure. If you choose a longer tenure, you have to pay higher interest rates and if you choose a shorter tenure, you can get a lower rate of interest.
- By opting for a suitable loan term, you can easily pay your interest on time without financial stress.
- Loan tenure if chosen wisely, will help you in creating credit scores. With a correct loan term, you can easily pay your EMI on time.
- Choosing the right loan terms helps to manage other things wisely.
Summary
Loan tenure is the duration of time in which you need to pay your debts. It’s limited and offered in two forms: long-term and short-term. The tenure may vary from one lender to another. Some banks provide loan repayment tenure of up to 65 months in Personal loans while some provide very less. It will be based on your credit score and the loan amount how much you want to borrow.
