Personal Loan Tenure: How to decide on a term? Here are 4 crucial factors to consider
The ideal repayment period for your personal loan depends on many factors, such as your goals and financial situation. Selecting a shorter payback period—12–36 months, for example—leads to lower total interest payments because interest accrues more quickly. Additionally, you’ll pay off debt faster, which will free up money for other financial objectives. However, if your income is restricted, the equated monthly installments (EMIs) would be higher and could cause financial strain.
Greater payback periods (36–60 months or longer) result in lower monthly installments, which facilitate better monthly budget management. But, since the loan is disbursed over a longer period, you will end up paying more interest overall and incurring debt for a longer period.
Key components of any loan and repayment terms significantly influence your borrowing experience. This is the reason they matter:
When deciding on a personal loan term, these are some critical factors to take into account.
Make use of a loan calculator. Personal loan calculators can be found online from many lenders. You can use these calculators to see how different loan amounts, interest rates, and repayment schedules affect your monthly installment amount and total amount of interest paid.
There’s no one-size-fits-all answer when it comes to the ideal payback period. You should carefully consider your goals and financial situation before making a decision. A financial advisor can offer tailored guidance based on your unique circumstances.
Frequently Asked Questions (FAQs)
A personal loan that is already in place typically cannot have its terms changed instantly. On the other hand, you might be able to refinance your loan and get a new one with a new term. The interest
Read more on livemint.com
