Like interest rates, the tenor of any financial product, including personal loans, varies across lenders. The personal loan tenor is a crucial factor that determines the borrowing experience and its different terms. Thus, knowing the minimum and maximum tenor for personal loans is essential before applying for credit.
Personal loan maximum tenor
Some financial institutions have set the maximum tenor of 96 months for a personal loan allowing borrowers to repay in affordable monthly instalments.
Individuals with lower monthly incomes should choose a personal loan with a longer tenor. It will assure financial institutions of timely repayments.
Although the maximum tenor offered under a personal loan is up to 96 months, one should also know the minimum duration to service this collateral-free credit.
Personal loan minimum tenor
The minimum tenor for a personal loan is 6 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 tenor for a personal loan helps individuals get a lower interest rate that maximises savings. A shorter tenor 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 tenor 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 tenor is reduced to two years, EMI payable would be Rs. 96,973 and interest payable would be Rs. 3,27,357.
Factors to consider while choosing a personal loan tenor
- Existing liabilities
Individuals with substantial existing debts are likely to have reduced disposable income. In such cases, it is advisable to choose the maximum tenor 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 tenor.
- Interest rates
Usually, a longer tenor entails higher interest rates. However, Bajaj Finserv offers a personal loan at competitive interest rates with a flexible tenor of up to 96 months.
Individuals can also trim their personal loan tenor by choosing the part-prepayment facility. With this option, borrowers can repay a lump sum before the tenor ends and reduce the interest burden, keeping the monthly payable intact.
Read More - Personal Loan Tenor
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 tenor as per their current financial capacity.
Now that you know the personal loan maximum and minimum tenor, do your math to decide upon the best repayment schedule you can afford.
Additional Read: Know everything about the loan
Frequently asked questions
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.
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.
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.
Bajaj Finance Limited offer personal loans over a tenure of up to 96 months.