The kind of world that we live in, there is a loan or credit available for everything and anything. And with the increase in our demands, credit is something that is availed off any time. This also has further led to addiction on credit, which has resulted in a further increase in the spending power of an individual. We now see more and more people acquiring Personal Loans, which have become an extremely popular choice when it comes to getting some quick funds at disposable.
A Personal Loan is most frequently availed and popular type of unsecured loan. It is a unique type of loan, which can be used for a variety of reasons. For example, it can be used for a wedding, a vacation, for interiors, home renovation or refurbishing, for buying a vehicle and so on.
These loans come at an affordable interest rate and can be repaid in a convenient tenure. Many Personal Loan offers, such and Capital First Personal Loan, come at an attractive interest rate.
Personal Loans can be your best friend in all your financial needs, however, choosing the right financing options is no easy task. You have to compare various offers on the basis of interest rates, processing fee, other charges, eligibility criteria, ease of availing, and tenure. Although, factors like interest rate, processing fee, and eligibility terms are not in your control, you can definitely choose the tenure as per your need (varying from 1 year to 5 years). So, here are some tips that will help you choose the right Personal Loan tenure.
- Understanding your monthly budget
This is one of the most crucial and critical factors as far as choosing the right personal loan tenure is concerned. Understanding your monthly budget would help you to decide how much EMI you can afford. If you want lower EMIs, you should opt for a longer tenure. It would be better to make a note of all the basic expenses that you incur in a month. Doing this would give you a better understanding payoff how much amount you can pay as EMI each month without affecting your daily life.
- Evaluate your future financial prospects
Try to understand if there is any additional income that you are expecting in the future, such as incentives or bonus, a pay hike, interest on savings or investments, money from a friend (which you had lent earlier), and others. This would all account for having more income or finances that would be available at your disposable, which can then be used towards the prepayment for the loan. If there is any such financial projection, you may opt for short tenure or can alter your tenure later by prepaying your outstanding loan amount.
- Taking into account existing liabilities
Remember to take all your existing liabilities into account that might affect the monthly instalments you need to pay. These liabilities could include Credit Card payments or other loan obligations, school/college/tuition fees of your kids, house rent, car purchase, a wedding, and so on. When you are deciding the tenure for the Personal Loan, you need to ensure that all the commitments are properly balanced and the monthly instalment for the Personal Loan can be made without much hassle. Opt for a longer tenure if you have any planned expenses in the near future so that you can pay EMIs conveniently.
- Know the overall cost of the loan
It’s very important to understand the interest rate, processing fee and other costs associated with the loan. It will help you anaylse the overall cost of your loan. If the total cost is higher than your expectations, opt for a longer tenure.
- Usage of an EMI calculator
Nowadays you have EMI Calculator available on various websites and online lending marketplaces. This tool lets you calculate the EMI you have to pay for a particular loan by entering a few details like the applicable interest rate, loan amount, and tenure. Knowing the EMI beforehand will help you analyse how long should be your loan’s tenure so that you can repay these EMIS timely and comfortably.
We hope that the tips mentioned above will help you in deciding an appropriate Personal Loan tenure to ease your repayment burden.