Personal Loan

Things To Know About Personal Loan Tenure


A personal loan is a great credit alternative when you need money fast. You can use a personal loan for anything as long as you can justify the expense. But the interest rates are a touch higher than average. Due to this, the length of time a borrower has to pay back a personal loan is a significant factor in the amount of their EMI and the smoothness of their repayment.

The maximum and minimum personal loan tenure is outlined in this article, as is the significance of making an informed decision when selecting a loan tenure.

What Is a Personal Loan Tenure?

Understanding the finer points of a loan is especially crucial for a first-time borrower, and it’s believed that personal loan tenure is one of them.

The tenure of a loan is the amount of time the borrower has to pay back the principal and interest to the lender. You repay loans through Equated Monthly Installments (EMIs). EMIs are due on the same day each month. A lending institution may provide a loan for either a short or a long period. The borrower, however, has the last say about the tenure of the personal loan.

The typical tenure for a personal loan is 60 months, but the lowest tenure is sometimes 6 months.

How to Choose a Personal Loan Tenure

The terms of personal loans are typically very adaptable. The tenure length is flexible, ranging from 6 months to 5 years. You must consider your ability to make monthly payments when deciding on the loan tenure.

To arrive at a sound conclusion, you may want to consider the following:

1. A monthly income breakdown

Your tenure, expenses, and savings rate best determine repayment terms and EMIs.

Before agreeing to the loan, it’s a good idea to list all your monthly expenses and savings. Think about the outstanding debt you may have as well. You can tailor the size of your loan and the tenure of your EMI payments to your savings and spending habits.

You can make a good repayment strategy by putting 50% of your income into essentials and 30% into non-essentials. And the remaining 20% goes to savings and debt repayment.

2. Loan amount

Your personal loan tenure heavily depends on the sum you hope to borrow. It is preferable to have a shorter loan tenure if you borrow a small amount, like 2-3 times your monthly income. That’s because the interest you pay would be higher if you had a longer tenure.

Similarly, suppose you plan to borrow a quantity equal to 6–8 times your monthly income. In that case, you should choose a longer repayment tenure. Choosing a tenure that is too short puts stress on your finances and increases the risk of default.

3. Interest

Your credit score is a major factor in determining the interest rate on personal loans. Your interest rate depends on more than just your credit score. It also depends on the personal loan tenure you choose. Interest rates are lower for loans with a shorter tenure and higher for those with a longer tenure.

If your credit score allows for a cheaper interest rate, take the shorter tenure and save money.

Suppose you have a low credit score. In that case, a shorter tenure with a higher interest rate can hurt your finances more than a longer tenure would. So, choosing a longer tenure is a good idea if you want to increase your credit score.

4. Future financial goals

You should factor any upcoming wage increases or an increase in other income into your budget. In that case, you might shorten your loan tenure by increasing your EMI payment.

Making the payments on a larger EMI before the increase takes effect may be difficult. But you will save significant money on interest throughout the loan.

5. Using a Personal Loan EMI Calculator

A personal loan EMI calculator can help determine how long a personal loan tenure is best for your situation. It is free and simple to use. Also, it helps to determine your monthly payment and loan tenure with minimal effort.

To get the most affordable EMI, try adjusting the years you want to make your tenure payments.

When you use an EMI calculator for a personal loan, you can easily calculate the interest you will pay. You can also calculate the total amount you will have to pay back during the term of the loan.

Importance of Choosing the Right Personal Loan Tenure

In deciding on a personal loan, the tenure length is as important as the loan amount. It is important to choose a loan term that lets you get the most out of the money you borrow.

Compared to secured loans, the tenure for unsecured personal loans is much shorter. But the maximum term allowed differs between financial institutions. Personal loans are more expensive because they are unsecured.

Choosing a personal loan tenure that allows you to afford the EMI each month is an important step. It is important for better money management.

If you pay back the loan on time, it will reflect well on your credit record, which is a plus. This will make it easier for you to get loans in the future without a credit check and with better terms and lower interest rates.


Personal loans are the most convenient. Plus, their approval process is also more relaxed than other types of loans. Yet, this doesn’t imply that you’ll go for a long repayment tenure. Or, a short payback tenure regarding the quantity of your loan.

A loan’s improper tenure length might have a devastating effect on your finances. If you go into default, it will limit your ability to get money for a very long time.

Before deciding on a personal loan tenure, weighing each option’s benefits and drawbacks is important. Also, thoroughly read the terms of the personal loan tenure. And, whatever repayment tenure you choose, please pay on time each month.

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