Tenure for Personal Loan

How to Choose the Right Personal Loan Tenure?

April 15, 2022 • 6865 views

Personal loans are "all-purpose loans". You can use them to meet any personal or financial need, such as paying expensive medical bills, financing a business venture, arranging lavish wedding ceremonies, investment purposes, etc. Many banking and non-banking financial companies (NBFCs) offer personal loans with minimal documents and without any kind of collateral. As a result, personal loans are in high demand compared to other types of loans.

The repayment tenure affects your Equated Monthly Installment (EMI) amount and the total interest payable. A longer tenure would translate into a lower EMI while a shorter one would mean a higher EMI amount. Opting for a longer tenure will also mean that you will pay more interest during the loan tenure.

Choosing the right tenure on your loan is important as it will help you save money in the long run. Hence, to help you choose the right tenure on your loan, we have listed some tips for you below:

How to Choose Personal Loan Tenure?

While deciding on the tenure for a personal loan, you need to consider the following factors

1. Loan Amount

The amount required to be borrowed as a personal loan significantly affects the loan tenure. For smaller loan amounts, you do not need to spread your loan tenure for a longer period. Similarly, if you are planning to borrow a larger amount, it is better to extend the tenure of your loan so that there is no strain on your financial position.

2. Calculate Interest Rates

Factors like interest rates, EMI amount and loan tenure influence each other. Generally, the higher the interest rate, the higher the EMI amount and the longer the loan tenure. So, when you are deciding on your loan tenure, make sure you try all the permutations and combinations of interest rates offered by different loan providers and your EMI options to choose the personal loan tenure that is convenient for you.

3. Set Your Monthly Budget

Your regular income and monthly budget should be assessed and compared with the repayment terms. If you feel that your monthly expenses take about 70-80% of your monthly income, then you can go easy on the EMI amount for your loan. However, lower EMI means longer loan tenure. Similarly, if you feel that you can budget your monthly income in such a way that you can make higher EMI payments, you can opt for a shorter personal loan tenure.

4. Consider Your Future Financial Investments

While it is important to have clarity on your monthly budget, it is equally important that you consider your future financial prospects. If you are sure of a possible salary hike or other financial enhancement in the future, paying higher EMIs, in the long run, would not be a problem. In that case, you can choose a shorter tenure to repay your loan

5. Clear Any Current Financial Liabilities

If you don't have a good credit score, chances are you'll have to pay higher interest rates. This, in turn, will affect the duration of your loan tenure. Also, paying off existing loans can put a huge strain on your monthly budget, making you unnecessarily extend the new personal loan tenure to manage new EMIs. Therefore, you must clear any existing debt or financial liabilities and maintain a good credit record.

6. Use EMI Calculator

An easy-to-access tool that gives you an all-around view of the financials involved in the loan helps you make important decisions regarding personal loans including choosing the tenure. EMI calculators help you calculate EMI amounts and get key details of various charges involved in the loan. This tool can also be used to compare loan offers from different banks, which best fit your needs.

A personal loan is one of the most accessible loans in the market today. Strict financial discipline should be followed so that it does not affect your creditworthiness or take a toll on your finances. Before signing up for the loan, it is imperative to study the offers and compare the loan products offered by different banks and financial institutions.

7. Enquire About Additional Fees

Avoid opting for a low personal loan interest rate only. Before finalizing a personal loan plan, check any processing fees, bounce charges, penal interest, and other charges. Some institutions may charge higher fees in some cases, which may cost you more than you would like.

8. Ensure Repayment Flexibility

For the best lending experience, look for a flexible repayment tenure. This will allow you to divide your EMI over a suitable tenure to repay the loan based on your ability. You can opt for a longer tenure to avail affordable EMIs and claim tax benefits. But consider that the longer the tenure, the more interest you must pay. You can opt for a shorter tenure while ensuring that the EMI stays within your budget. Choose your vendor accordingly.


Most banks and NBFCs offer eligibility calculators as well as EMI calculators that help calculate personal loan EMI on their websites to help you get an idea of your loan repayment options. You can use these online tools to get more information about your loan and decide on the tenure of your loan. Make sure that you are completely careful while deciding your loan tenure, to avoid paying EMIs for several years at unnecessarily high-interest rates.

For comfortable personal loan tenure options, visit us at Poonawalla Fincorp and apply for a personal loan which offers benefits like instant approval of your loan request, minimal documentation, and fast online processing

Choosing the right personal loan tenure is as important as choosing the right loan amount and interest rate. If your financial situation allows you to choose a shorter tenure, do so and save on a personal loan. Remember, every penny counts!


We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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