Choosing the appropriate loan tenure for your personal loan is essential for managing monthly payments and avoiding paying excessive interest.
A personal loan is an unsecured loan, which allows you to get money without providing collateral. The borrowed funds may be used for a variety of purposes, including dealing with an emergency, financing your business, or pursuing your educational objectives. However, because a personal loan does not require collateral, the interest rate is relatively higher compared to other types of loans. Therefore, it is essential to plan your finances before applying for a personal loan. When planning your finances, you must closely consider the tenure of your personal loan.
The tenure of a loan can have a substantial effect on your monthly payments, interest rates, and total cost of borrowing. A lesser tenure requires you to set aside funds in your budget for loan repayments. On the other side, a longer tenure results in a higher average cost of borrowing. To ensure that you receive the desired benefits from your Bajaj Finserv Personal Loan, it is crucial to select the appropriate personal loan tenure.
Here are a few factors that you must consider before selecting the tenure of the personal loan:
Consider your budget
Before exploring personal loan options, it is essential to evaluate your budget and determine how much you can afford to repay each month. Examine your monthly income, expenses, and debts to determine your financial situation. You should pick a loan tenure that is manageable for your finances so that you don’t end up in financial trouble or default.
Opt for the right loan amount
Choosing the appropriate loan amount is an important consideration when determining loan tenure. You should not borrow more money than you require, as this will result in higher interest rates and a longer repayment period. On the other hand, if you borrow too little, your expenses may not be covered. In that case, you may need to borrow a loan again and it will incur additional fees. Therefore, consider your requirements carefully and borrow only what is required.
Calculate the interest rates
Shorter loan terms are associated with a lower interest rate, whereas lengthier loan terms are associated with higher interest payments. If you are offered a lower interest rate, you should choose a lesser tenure to avoid paying more interest and vice versa. You can combine various loan tenure options with the proposed loan amount to determine the optimal loan tenure for you.
Assess your financial goals
If you are looking to pay off debt swiftly and improve your credit score, or if you’re salaried and anticipating a raise shortly, a shorter loan term may be your best option. In contrast, a longer loan tenure may be preferable if you desire greater flexibility in your monthly budget. Consider what you expect to accomplish with the loan and how the loan’s tenure will either help or hinder your efforts.
Use the personal EMI calculator
Manual calculations can be time-consuming and difficult. You can instead use the EMI calculator for personal loans available on your lender’s website to determine the monthly EMIs you will be required to pay. This will help you understand the appropriate loan tenure based on your repayment capacity. The Bajaj Finserv Personal Loan EMI calculator is simple to use. This EMI Calculator requires only three fields to calculate your monthly payments: the loan amount, the interest rate, and the loan tenure. In addition to calculating the EMI, the Bajaj Finserv EMI calculator for personal loans displays the principal and interest amounts as well as the total cost of financing.
You can get a Bajaj Finserv Personal Loan of up to Rs.40 lakh within 24 hours* of loan approval, and you can repay the loan over a flexible period of 6 to 84 months. Visit the website of Bajaj Finserv to apply for a personal loan to cover your small and large expenses.
