5 Simple Steps To Choosing The Right Personal Loan Tenure
Personal loan tenure affects the amount of EMI and the total interest payable. So, it is crucial to choose the right loan tenure wisely.
A longer personal loan tenure means that you have to pay lower EMIs. Whereas, Shorter tenure means that the EMI amount will be higher. Choosing longer tenure also means that you will pay more interest. So, choosing the right tenure is an unavoidable factor to save money in the long run. Here are 5 easy steps that can help you choose the right tenure.
- Your monthly income: The best way to determine the right loan personal loan tenure and EMI amount are to analyze your spending and savings rate. Make a list of your monthly expenses and calculate how much you can save before going for a loan. Also, consider your existing liabilities. Based on all these facts, you can determine your EMI amount and loan tenure.
- Loan amount: The amount you want to borrow has a huge impact on the loan tenure. Go for short loan tenure when you want to borrow a small amount, such as 2-3 times your monthly income. Similarly, you should choose a longer tenure when you wish to borrow a large amount, such as 6-8 times your monthly income. In this case, short tenure can put a strain on your finances. Moreover, it could lead you to default which could be more dangerous.
- Interest rate: The personal loan tenure affects the interest rate. You should go for a shorter tenure when you are getting a lower interest rate. When you are not eligible to get a lower interest rate, longer tenure is best for you.
- Future financial prospects: When calculating EMI and loan tenure, you should consider those salary hike or increment that is going to happen soon. This way, you can go for a higher EMI amount. It helps reduce your loan tenure. This method is crucial when you are taking a personal loan for salaried employees.
- Use an EMI calculator: Always use the EMI calculator when deciding the loan tenure. It is easy to use, free, and accurate online tool. Try different tenure combinations to find out the ideal EMI amount.
An incorrect loan tenure significantly damages your finances. It becomes a burden. It can limit your financial accessibility for a long time. Therefore, it is important to select the loan tenure carefully.
Additional Read: Know How To Check And Download Statement For Personal Loan