How to choose the right Personal Loan tenure?

As a child, your parents would encourage you to save money in your piggy bank and once you grew up, they asked you to open a Bank Account. The idea was that these savings can help you meet an unforeseen requirement. But do not assume that it would be terrible to break the savings you have been building or if the savings can offer enough funds to fulfil the requirement.
 
Applying for a Personal Loan is typically the simplest way to meet your requirement. It is an Unsecured Loan and can apply for them at attractive interest rates. You can repay the Loan amount easily in equated monthly instalments. You can apply for a Loan with any leading bank offline or online. When applying for a Loan, most applicants pay maximum attention to the interest rates applicable.
 
Very little emphasis is placed on tenure. However, it is the duration that dictates your interest liability. It also determines how easily you can repay the Loan. Consider the following pointers to choose the right tenure:
 
Monthly repayment capacity
 
Gauge your monthly repayment capacity to choose a suitable repayment tenure. Understand your capacity by considering your monthly income and debt-to-income ratio. If you possess a higher repayment capacity, you can afford to pay a higher EMI amount, thereby making it feasible to opt for a shorter tenure and vice-versa.
 
Loan amount
 
You should also consider the Loan amount before deciding your Personal Loan tenure. Generally, opting for a longer tenure is a viable option if you need to repay a significant Loan amount. This reduces the EMI burden on you, allowing you to repay the Loan without any defaults. If the Loan amount is within your means, consider opting for a shorter tenure. This way, you can clear your debt in no time.
 
Interest liabilities
 
Note down the associated interest liabilities to choose the right tenure for your Loan application. Typically, a longer tenure translates to higher interest liability and vice-versa. If you do not wish to take on a high-interest liability, opting for a shorter tenure is an option.  EMI calculator for Personal Loan is a useful online tool that lets you make the right choice. Enter the Loan amount, interest rates, and tenure in the calculator to get an estimate of payable EMIs.
 
If you feel that you can afford to pay more than the calculated EMI, you can consider opting for a short-term tenure and vice-versa. Any number of adjustments can be made to Loan variables. The online tool reflects accurate results within minutes.
 
Author bio
 
Neha Sharma, a finance student, loves to write in her free time. She has spent a considerable time researching on Personal Loan. Through her work, she lists ways to choose the right tenure