What is the maximum & minimum tenure for a personal loan

2 min read

Like interest rates, the tenure of any financial product, including personal loans, varies 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.

What is a Personal loan

A personal loan is an unsecured financial product that allows borrowers to access funds for various needs such as medical bills, home renovations, or personal emergencies. Unlike secured loans, it does not require collateral, making it a more accessible option for many. The loan tenure can range from a few months to several years, typically between 1 year to 8 years, depending on the lender and the borrower's profile. Longer tenures generally come with lower monthly payments but higher interest costs, while shorter tenures may lead to higher monthly payments but lower overall interest.

What is Loan tenure

Loan tenure refers to the period over which a borrower must repay the loan amount, including interest, to the lender. The tenure can vary based on the type of loan and lender's terms, ranging from a few months to several years. Shorter tenures typically mean higher monthly payments but lower interest, while longer tenures result in smaller monthly payments but higher overall interest.

Importance of choosing the right loan tenure

Choosing the right loan tenure is crucial as it directly affects your monthly repayments and the total interest paid. A longer personal loan tenure may lower monthly payments, but it results in paying more interest over time. Conversely, a shorter tenure will lead to higher monthly payments but lower overall interest. It is important to balance affordability and the cost of borrowing. In India, the personal loan maximum tenure typically ranges from 1 year to 8 years, but some lenders may offer longer terms based on individual eligibility. Selecting the optimal tenure helps ensure financial stability.

What is the maximum loan duration for the personal loan

The maximum loan duration for a personal loan is typically set at 8 years by many financial institutions. This extended tenure allows borrowers to make affordable monthly repayments, making it easier to manage their finances. For individuals with lower monthly incomes, opting for a longer personal loan tenure can help ensure timely repayments and provide financial flexibility. While the maximum loan duration may extend up to 8 years, it is also important to understand the minimum duration for repaying this collateral-free loan. The ideal loan tenure should balance affordable monthly payments with the total interest paid, ensuring financial stability and efficient loan management.

What is the minimum loan duration for the personal loan

The minimum tenure for a personal loan is 12 months. It must be noted that while the loan repayment will be faster, the EMIs may be on the higher side, depending on the borrowed amount.

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; thus, lenders can offer better rates on this product.

You can also use our personal loan EMI calculator and plan your repayment journey wisely.

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. 55,661, and the total interest outgo will be Rs. 6,71,752.

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

Personal loan maximum tenure Vs Personal Loan Minimum Tenure: Which One is Better

Criteria

Personal Loan Maximum Tenure

Personal Loan Minimum Tenure

Loan Duration

Up to 96 months (8 years)

Typically, 12 months (1 year)

Monthly Instalments

Lower monthly payments, easier to manage

Higher monthly payments, more challenging to fit in budget

Total Interest Paid

Higher overall interest payments due to longer duration

Lower overall interest paid as the loan is repaid faster

Eligibility

May require higher income or good credit score

Easier to qualify for, with fewer income requirements

Best For

Individuals looking for smaller monthly payments

Individuals who can afford higher payments and want to pay off the loan faster

Financial Flexibility

Offers more flexibility in managing finances

Less flexibility, as the loan is paid off quicker


This table highlights the differences between the personal loan maximum tenure and personal loan minimum tenure, helping borrowers choose the one that best suits their financial situation.

Factors to consider while choosing a personal loan tenure

Evaluate existing liabilities, monthly income, and interest rates. Opt for longer tenors for affordability or shorter ones to save on interest. Use part-prepayment to reduce costs.

  • Existing liabilities
    Individuals with substantial existing debts are likely to have reduced disposable income. In such cases, it is advisable to choose the maximum tenure available.
  • 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 96 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.

Common long-time personal loan tenure

A common long personal loan tenure typically ranges from 6 months to 8 years, though some lenders may extend it to 10 years or more. The duration depends on factors like the loan amount, interest rate, and borrower's creditworthiness. Longer tenures often result in lower monthly payments but may accrue more interest over time. Borrowers seeking lower monthly commitments may opt for extended tenures, while those aiming to minimize overall interest payments may prefer shorter durations. It's essential for individuals to carefully consider their financial goals and circumstances before choosing a personal loan tenure that aligns with their repayment capabilities and long-term financial plans.

Benefits of a 7-year personal loan

  • Lower monthly payments: Long-term personal loans typically come with lower monthly instalment amounts, making it easier for borrowers to manage their cash flow and budget effectively.
  • Financial flexibility: Extended loan tenures provide borrowers with financial flexibility, reducing the immediate financial strain and allowing for more room in the monthly budget for other expenses or savings.
  • Easier qualification: Longer tenures may increase the chances of loan approval as lenders often consider lower monthly payments as a sign of reduced risk for default.
  • Accommodating large loan amounts: For substantial loan amounts, a longer tenure may be necessary to distribute the repayments over an extended period, preventing excessive financial strain.

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.

Additional Read: Know everything about the loan

Read More Read Less

Frequently asked questions

Can we get a personal loan of up to seven years?

The maximum personal loan tenure varies among lenders, but it's possible to get a personal loan with a tenure of up to seven years, depending on the lender's policies and the borrower's creditworthiness.

Bajaj Finance Personal Loans come with flexible repayment tenures that range up to 8 years.

What is the EMI for Rs. 10 lakh personal loan for 5 years?

Customers can use the personal loan EMI calculator to determine their EMIs conveniently. The Bajaj Finance Personal Loan EMI Calculator utilises only three essential fields to determine your monthly instalments: the personal loan tenure, the loan amount you wish to borrow, and the interest rate.

Can I get a personal loan for 10 years?

Personal loans typically have tenures usually ranging up to 96 months. While it's uncommon to find a personal loan with a 10-year term, you can explore other loan options or consider a different type of financing for longer durations, such as a mortgage loan.

What is the longest tenure for a personal loan?

Bajaj Finance Limited offer personal loans over a tenure of up to 96 months.

Is it possible to get a 15-year personal loan?

It's uncommon to find personal loans with a 15-year term; they're usually shorter of up to 8 years.

Is a longer loan term better?

Longer loan terms can mean lower monthly payments but higher overall interest costs. Choose based on your financial goals.

Can I choose any tenure within the maximum and minimum limits?

Yes, borrowers can select any tenure within the offered range, subject to the lender’s policy and eligibility criteria.

What is the maximum tenure to repay a personal loan?

The maximum tenure varies but is usually up to 96 months, depending on the lender's terms and conditions.

What is the longest personal loan period?

The longest tenure typically offered by financial institutions for a personal loan is 96 months.

How does the tenure affect my EMI amount?

Longer tenures result in lower EMIs but higher interest costs, while shorter tenures increase EMIs but reduce total interest.

Can I change the loan tenure after availing of the personal loan?

No, loan tenure cannot usually be changed after approval, but prepayment or foreclosure options may help adjust repayment.

Can the loan tenure affect the interest rate on the personal loan?

Yes, shorter tenures often come with lower interest costs, while longer tenures may lead to higher interest payments.

Does the loan tenure affect my credit score?

Yes, timely repayments throughout the tenure positively impact your credit score, while delays can harm it.

Can I close my personal loan before?

Yes, you can prepay or foreclose your loan early, subject to lender terms and any applicable charges.

How can I calculate loan tenure?

Use an EMI calculator by entering the loan amount, interest rate, and preferred EMI to estimate your tenure accurately.

Show More Show Less