What is the Tenure of a Personal Loan? Overview
Tenure of a personal Loan:-
Full tenure of the personal loan can be from 1 to 5 years or 12 to 60 months. Shorter or longer tenures may be allowed depending on the case, but this is rare. Usually, it is disbursed to the lender within 7 working days of the loan application.
Let's take an example:-
Now if you take a personal loan of Rs 1 lakhs for a period of seven years at 18 percent interest, then you will pay a total of Rs 76550 as interest during this period.
long tenure loans:
The term of a long tenure loan can range from three to twenty-five years and a debtor must have a positive credit history, ability to provide collateral and capital to qualify. long-term loans provide the debt financing needed for car & home purchases.
Reduces your monthly EMIs
EMI reduces as the tenure gets longer. On the other hand, if you pay more EMI every month, the loan gets terminated sooner. If you opt for short term loans, then keep it in mind that you can easily repay its EMI. If you are not able to pay the EMI on time, in that case your CIBIL score will also be bad and the bank will also impose a penalty on you.
Build Credit Score
Generally, long-term loans have very structured process of loan repayment that is specially designed to meet the repayment capacity of the borrower, irrespective of unforeseen events. Therefore, making regular payments on long-term loans will allow individuals or businesses to build their credit score good.
Short Tenure Loans:-
The tenure of the loan decides whether the loan is a short term loan or a long term loan. A short term loan is generally taken for a period of 1 year to manage the immediate financial needs of any borrower. The loan amount sanctioned for online short term loans are varies from lender to lender and its purpose. Borrowers who needs urgent money can expect instant short term loans within 24 hours through instant personal loan apps.
If you are also taking a personal loan and want to keep its tenure short, then keep in mind that you can easily repay its EMI. If you are not able to pay the EMI on time, then in that case your CIBIL score will also be bad and the bank will also impose penalty on you.
Improve credit score
Paying EMIs on time increases the credit score. Short term loans are less as compared to long term loan amounts. It can be repaid easily in EMI without any difficulty. Short term loans have less scope for delayed EMI payments.
Easy Loan Approval
Short term loans take quick time to get approval & disbursement of loan amount with minimal documentation, whereas long term loans with higher amount require more time in verification of the borrower's creditworthiness and assets.
An emergency situation is expected on the business front. In case of natural calamities, technical faults, equipment repair or connectivity issues, short-term loans can help to cover emergency expenses.
Frequently asked Questions
What is the maximum Tenure of Personal Loan?
Generally, personal loans are offered by lending institutions like banks for a maximum period of 7 years.
What is the repayment tenure for personal loans?
The maximum Personal Loan tenure offered by all the major banks & lenders is up-to 7 years. The longer the tenure, the lower the EMI, which makes it very attractive to go for a loan of 5-7 years. It is best to take a loan for the shortest tenure that you can afford.
What is the average term of a personal loan?
The average term of a personal loan ranges between 12 to 84 months.
Can I change my personal loan tenure?
If you want any changes in the ongoing personal loan structure, it will depend on the repayment track of your loan. If you request the lender to extend the personal loan tenure, it will first check your repayment track and see how hard you have paid the EMI.
How do I choose a loan tenure?
For the small loan amounts, like as borrowing 2-3 times of your monthly income, you should choose for a shorter term loan, as choosing a longer term increases your interest cost also. You should go for a longer tenure by borrowing a larger amount, equal to 6-8 times your monthly income.
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