When considering a Personal Loan, understanding the range of tenures available is crucial. The right Personal Loan tenure for you can help in finding the right balance between easy repayments and how much interest you end up paying overall. Let us understand the concept of Personal Loan tenure, exploring both the longest and shortest duration available to help you make an informed decision.
What is a Personal Loan tenure?
A Personal Loan tenure is the agreed period between the borrower and lender for repaying the borrowed sum, including the interest. This term directly impacts the monthly repayment amount and the total interest paid over the life of the loan. Lenders provide a variety of tenure options to accommodate different financial situations, offering significant flexibility to borrowers. Choosing the right amount of time to fully pay back your loan is important. The chosen tenure lets you balance your payments with what you can afford and what you want to achieve financially. This way, you can pay back the loan without hurting your financial well-being.
Maximum loan duration for Personal Loans
When exploring the options for a Personal Loan, you will notice that the available tenure usually spans from one to five years, influenced by the lender's guidelines and your creditworthiness. For those wanting a larger loan amount, a longer repayment period — such as over five years — is advantageous.
This will ensure that your monthly installments are within a manageable range and will facilitate timely loan repayment. It is advisable to pick a repayment period that lets you handle your monthly payments comfortably without stretching your budget.
Axis Bank extends a maximum tenure option for Personal Loans of up to 84 months, offering exceptional flexibility to borrowers seeking to tailor their repayment schedule for optimal affordability.
Minimum loan duration for Personal Loans
Personal Loans typically have a minimum tenure that can range from 10 to 12 months, with certain lenders providing options as short as three months. Similar to the Personal Loan maximum tenure, the minimum duration for repaying a Personal Loan varies across financial institutions. It's critical to assess your financial obligations before settling on a shorter repayment period.
Opting for a shorter tenure is particularly advantageous for those borrowing smaller amounts or individuals with a higher monthly income that can easily cover the EMI payments. This approach enables borrowers to clear their debt swiftly, thus freeing themselves from long-term financial liabilities.
Axis Bank distinguishes itself by offering a minimum tenure of 12 months or 1 year, providing borrowers with flexibility while encouraging rapid debt resolution.
Also Read: Personal Loan repayment guide: mastering the art of savvy finances
Factors to consider while choosing a Personal Loan tenure
When selecting a Personal Loan tenure, several factors must be evaluated to suit your financial situation and goals:
- Monthly budget
Analyse how much money you earn and spend each month. This helps you figure out if you can afford to repay the loan quickly with higher EMIs. By opting for a shorter time to pay back the personal loan, you need to make sure higher EMIs don't stretch your budget too thin.
- Financial goals
The objective of your loan can dictate how long the tenure should be. If you want to finish your debt fast, choose a shorter loan. However, if you have other bills to pay and need to keep your monthly payments low, a longer loan might be better. Look for loans that allow prepayments without a penalty in case you are able to close your loan sooner.
- Loan purpose
If you need money for something that's only short-term, a quicker payback period might work best. But if you are planning something big that benefits from spreading out payments, like a major home improvement, then a longer payback time could make things easier.
Navigating interest rates and tenure
When you're looking at Personal Loans, it is important to know the interest rate and figure out how long you have to pay back the loan. A loan with a really long time to pay it back might look good at first as your EMIs will be lower. However, with a longer tenure you will end up paying more in interest.
On the other hand, if you pick the shortest time to pay back the loan, your EMIs will be bigger, but you'll end up paying less interest. You will have to figure out your priority: having lower monthly payments or paying less in interest over time. This decision is a big part of planning your money wisely.
Which loan tenure is right for you?
The right Personal Loan tenure for you depends on your individual financial situation and goals. If minimising your monthly outgo is crucial due to other financial commitments, opting for a longer tenure makes sense. However, if you're keen on saving on interest and are comfortable with a higher EMI, a shorter tenure could be the better choice.
Finding the right balance between the maximum and minimum tenure is key to managing your finances effectively. Consider your monthly budget, financial goals, and the purpose of the loan to determine the most advantageous tenure for your needs.
Also Read: Choosing the right Personal Loan for your needs
Conclusion
With the right approach, a Personal Loan can be a powerful tool in achieving your financial objectives. With a maximum Personal Loan amount of up to ₹40 lakhs and tenure options ranging from 12 to 84 months, Axis Bank caters to a diverse range of financial needs and repayment capabilities. Competitive interest rates from 10.75% p.a., coupled with a swift, paperless online process and quick approval within 30 seconds, make Axis Bank the right choice for your personal financing solutions.
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
