What Is the Minimum & Maximum Personal Loan Tenure?
Whether it’s a sudden travel plan, a car breakdown, a house emergency, or a burst pipe, unexpected expenses can knock on your door anytime. Especially towards the end of the month, when your salary disappears, and a financial crunch comes squirrelling into your life. In such cases, either you think of borrowing some money from your friends or family, or you turn to a credit card. This might solve the problem once, but not every time. So, what happens when you run out of all the options to borrow some money from? If you do not want to strain your relationship with your friends or family, StashFin can assist you in getting a personal loan with loads of benefits.
Instant personal loans come with benefits, but at the same time, it is important to fully understand the terms and conditions and especially comprehend personal loan tenure, minimum tenure, and maximum tenure. This is because the maximum loan tenure for a personal loan and minimum tenure decide your monthly payments and overall cost of borrowing. So, if you are keen to understand precisely the maximum and minimum tenure for Personal Loans, this blog will help you!
What is a Personal Loan Tenure?
Rule number one of responsible borrowing is to know and estimate the tenure of a personal loan. A Personal Loan is an unsecured loan issued by a bank or non-banking financial company (NBFC) for personal use on the basis of creditworthiness and income rather than collateral. These are generally fixed-rate loans, which means that the rate of interest remains constant throughout the loan period. When you take a personal loan, you are bound to repay it within a defined period, which is called a loan tenure. It plays an important role in determining your monthly EMI (Equated Monthly Installments) for the loan.
Various types of loans are available, each with different repayment terms. For example, the tenure of a personal loan can be as short as 3-6 months, while other loans, such as home loans, can have loan tenures of up to 30 years. StashFin offers outstanding flexibility with convenient EMIs and tenure of your choice ranging from 3 months to 36 months.
Let us clearly understand how the choice of personal loan tenure can impact your repayments. Assume that you need a loan of 5.5 lakh at an interest rate of 11%, and you get to choose the tenure of upto 3 years or 4 years. If you choose a tenure of 4 years, your EMI will be INR 14,215, and your total interest payment will be INR 1,32,322. However, If you choose a tenure of 3 years, your monthly EMI will be INR 18,000, and your total interest payment will be much lower, i.e., INR 98,227.
Similarly, If you opt for a shorter tenure, your EMI might increase a bit, but the total interest payment will be reduced greatly. You can try our Loan EMI calculator to see how different loan tenures affect your EMI for a given loan amount. It will show you the EMI for various loan tenures.
So, the moral of the story is that by opting for a longer loan tenure, your EMI will be lower. But in this case, you will also have to pay higher interest. However, if you have opted for a personal loan minimum tenure, you have to pay a higher EMI, but in this case, you will pay lower interest.
What is the Maximum Loan Tenure for the Personal Loan?
The maximum loan tenure for a Stashfin Personal Loan is 36 months or 3 years. Choosing this maximum tenure can be beneficial if you prefer lower monthly EMIs. However, it’s important to note that a longer tenure can lead to higher overall interest costs.
What is the Minimum Loan Tenure for the Personal Loan?
With Stashfin, the minimum loan tenure is 3 months. If you need quick funds to meet immediate financial needs and can repay the loan within a shorter period, you may opt for this minimum tenure for the personal loan. A shorter tenure typically leads to higher EMIs but lower overall interest costs.
Although you are free to pick a tenure that works for you, ranging from 3 months to 36 months, Stashfin also allows a one-month, interest-free repayment option, with the help of which you can also repay the complete loan amount within a month without any additional interest being charged.
Short-Term vs Long-Term Tenure: Which One is Better?
| Feature | Short-term Tenure in Personal Loan | Long-term Tenure in Personal Loan |
|---|---|---|
| Repayment Period | Minimum tenure is 3 months | The maximum repayment tenure is 36 months. |
| Monthly EMIs | Higher | Lower |
| Total Interest Paid | Lower | Higher |
| Impact on Credit Score | Timely payments improve credit score quickly. | There is slower improvement in credit score, but consistent payments can positively impact credit score. |
| Ideal for | Immediate financial needs, debt repayment, smaller/leisure expenses | Larger purchases, home renovations, education, and business expenses |
| Risk Factors | Higher risk of financial stress due to higher EMIs | Lower risk of financial stress but potential for higher overall interest cost |
| Best Suited For | Individuals with a stable income and strong financial history | Individuals with consistent income and a clear long-term financial plan |
Key Factors to Consider When Choosing Personal Loan Tenure
When picking your personal loan tenure, the following essential factors must be considered:
Purpose of Loan
The first step is to identify the reason for and requirements for the loan. Knowing the reason will help you estimate the appropriate time to take a loan, and understanding the requirements will help you clearly understand the loan amount you need. You will also get clarity on whether you need a loan for a shorter tenure for an urgent need, like a vacation or investment or for a longer tenure, like a home renovation.
Monthly Payout Capacity:
Another important factor is to consider monthly repayment capacity. If you have chosen a personal loan with minimum tenure, this means that you will have to give away higher monthly payments. And if you opt for a personal loan with maximum duration, your EMI will be comparatively smaller. Sit down and check your monthly income and expenses, and do not forget to use a Personal Loan EMI calculator to get a complete idea of your monthly budget so that you can repay without failure.
Pre-payment Options
The flexible repayment option is like the icing on the cake. If you think there are chances that you can pay back the loan early without penalties, then choose a longer tenure and pay it off quicker if your financial situation improves. Stashfin allows an interest-free one-month repayment facility for all users.
Rate of Interest:
The personal loan interest rates vary with the loan tenure. Longer tenure means a higher rate of interest; thus, be very thoughtful about the interest you would want to pay for the loan amount.
Age
If you are close to your retirement, then a shorter personal loan tenure can be the best option for you. Retiring with debt can be painful. Younger individuals can easily choose the personal loan tenure based on their source of income.
Financial Goals
If the goal is to become debt-free early, then shorter personal loan tenure will be the best choice. But if the situation allows a small EMI amount, then maximum personal loan tenure is the best option to look for.
Conclusion
Stashfin can help you get an instant loan of up to Rs.5 Lakhs with flexible repayment tenure (upto 36 months) and one month of interest-free credit. You can also get access to profitable bonds and Insurance options to invest in at affordable prices. The interest rates usually start at 10.50% p.a. and are applicable only to the amount withdrawn. The best part is that they require minimal documentation and the quickest disbursal.
So, if you are unsure how much loan amount you are eligible for, download the Stashfin app and register yourself. Get the free CIBIL analysis and achieve your financial goals.
Frequently Asked Questions:
How does the loan tenure affect monthly payments?
Loan tenure is inversely proportional to monthly payments. The longer loan tenure leads to lower monthly payments and a shorter tenure leads to increased monthly payments.
Which is better: a short tenure or a long tenure?
The most important part is to maintain your CIBIL score and prioritise timely repayments to avoid penalties. Thus, whether you should choose minimum tenure for personal loan repayment or maximum tenure, be sure of your repayment schedule and capacity.
Can I change the loan tenure after taking the loan?
With Stashfin, you can get a flexible repayment tenure facility. This means that you can repay the loan the day you feel like you have the complete amount ready.
Are tenure options the same across all lenders?
No, tenure options are not the same across all lenders. Different lenders offer different tenure options based on their internal policies, risk assessment, and the specific loan product. Mostly, all lenders offer tenures ranging from a few months to several years, but the exact range can vary.