What is the maximum & minimum tenure for a personal loan?

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Like interest rates, the tenure of any financial product, including personal loans, vary across lenders. The personal loan tenure is a crucial factor that determines the borrowing experience and its different terms. Thus, knowing the minimum and maximum tenure for personal loans is essential before applying for credit.

Personal loan maximum tenure

Most financial institutions in India have set personal loan maximum tenure to up to 60 months. Flexible repayment tenures help clear debts with affordable monthly instalments.

This is why individuals with lower monthly income or eligibility should choose a personal loan with a longer tenure. It will ascertain financial institutions about the timely repayment without any miss.

Although the maximum tenure offered under a personal loan is five years, one should also know the minimum duration to service this collateral-free credit.

Personal loan minimum tenure

The minimum tenure for a personal loan is 12 months. Although the personal loan minimum tenure ensures faster repayment, the EMIs, on the other hand, are on the higher side.

Thus, individuals with sound financial backgrounds or better repayment capacity can choose the minimum tenure to reduce the overall interest payable.

Similarly, choosing the minimum tenure for a personal loan helps individuals get a lower interest rate that maximises savings. A shorter tenure reduces the lending risk, and thus lenders can offer better rates on this product.

Let’s understand with an example:

Suppose an individual opted for a personal loan of Rs. 20 lakh at an interest rate of 15% for a tenure of four years. The EMI payable will be Rs. 69,331, and the total interest outgo will be Rs. 4,95,905.

In another instance, if the tenure is reduced to one year, EMI payable would be Rs. 96,973 and interest payable would be Rs. 3,27,357.

Factors to consider while choosing a personal loan tenure

  • Existing liabilities
    Individuals with substantial existing debts mean reduced disposable income. In such cases, it is wiser to choose the personal loan maximum tenure. This will help repay the loan comfortably without any financial stress.
  • Monthly income
    The monthly income of applicants also plays a vital role while choosing the repayment duration of a personal loan. In simple words, higher monthly income promises better repayment capacity, which allows one to select a shorter tenure.
  • Interest rates
    Usually, a longer tenure entails higher interest rates. However, Bajaj Finserv offers a personal loan at competitive interest rates with a flexible tenure of up to 60 months.

Individuals can also trim their personal loan tenure by choosing the part-prepayment facility. With this option, borrowers can repay a lump sum before the tenure ends and reduce the interest burden, keeping the monthly payable intact.

Read More - Personal Loan Tenure

Similarly, individuals with a higher CIBIL score and immaculate repayment history can also negotiate with their existing lenders to revise the tenure as per their current financial capacity.

Now that you know the personal loan maximum and minimum tenure, do your math to decide upon the best repayment schedule you can afford.

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