Personal loan is a great option to meet any kind of financial obligation. As it is unsecured the applicant does not have to worry about pledging collateral to secure it. Always keep Personal Loan tenor in your mind when applying for Personal Loan. The lender does not scrutinize the use of the loan. Hence, it can be used to cater to personal or business needs, for debt consolidation and so on.
One of the important aspect of a personal loan is its tenure. It is a fixed period for which the loan is obtained for and during which it would be paid off. It is taken into account as it directly affects the loan amount of the loan. Let’s understand it better.
When you use the EMI calculator on the lender’s website the EMI calculated depends very much on the duration for which the loan is taken. A longer tenure reduces your EMI while a shorter tenure increases your EMI.
Tenure must be chosen carefully as it determines your financial capability. For instance, if you are going to keep working for the next 20-25 years say a job you can opt for a 20 years tenure on your loan. This will give you more time to pay off the loan conveniently without stressing your everyday expenses.
It is even beneficial to opt for shorter tenure as it entails lower interest payments.
Most NBFCs offer you the easy option to foreclose the loan before is due date. This helps in two ways – you can pay off the loan before time and these advance payments help to improve your credit score. A healthy/ good credit score (750+ or more) will in turn help you acquire the loan easily in future.
Additional Read: Tenure Of Personal Loan: Why It Matters?