How to Choose Your Personal Loan Tenure
Published on : September 11, 2023

When considering a personal loan, one crucial factor to evaluate is the loan tenure. The loan tenure refers to the duration within which you will repay the borrowed amount along with the interest. Choosing the right tenure can significantly impact your financial well-being. To make an informed decision, it is essential to assess your financial goals, current income, and monthly budget.

How To Choose Personal Loan Tenure

Understand Your Monthly Budget

It is one of the most important factors to consider when selecting a personal loan tenure. Your monthly budget is compared to your monthly income to determine your residual income. You can note down your monthly expenditures and compare them with your income. You can then accurately assess the remaining funds available. This will enable you to choose a tenure that aligns with your budget and doesn’t impose excessive financial strain on a monthly basis.

Analyse Your Potential Financial Future

If you are employed and anticipate a salary increase in the near future, you will have more flexibility to allocate a higher EMI towards your personal loan. By doing so, you can not only repay the loan earlier but also minimise the total interest expenses. Although this approach may temporarily increase your financial burden until the salary hike, it will yield significant benefits in the long run. 

Consider Current Liabilities

When determining the suitable tenure for your personal loan, it is essential to consider your existing financial commitments. These may include other loans, credit card payments, house rent, tuition fees, etc. Evaluating all these obligations will enable you to select a tenure that effectively balances your various financial responsibilities without causing undue difficulties. By taking these factors into account and utilising appropriate tools, you can make an informed decision about the tenure that best accommodates your financial obligations. 

Calculate the Interest Charges Involved

It is crucial to pay attention to the associated charges when considering a personal loan. To evaluate these charges, it is recommended to explore different tenure options in combination with the proposed loan amount and calculate the corresponding interest. Typically, opting for a longer loan term results in higher charges. It is important to avoid getting trapped with a loan that requires payment for an extended period of time. By carefully assessing the charges and considering shorter tenure options, you can ensure that you do not end up with a loan that burdens you for many years to come.

Importance of Choosing the Right Personal Loan Tenure

Choosing the right personal loan tenure is of utmost importance for several reasons.

  • It directly impacts the monthly instalment amount, ensuring it aligns with one’s financial capabilities. A longer tenure may reduce the monthly burden but increase the total interest paid over time.
  • Loan tenure determines the overall cost of borrowing, affecting the total repayment amount. A shorter tenure may lead to higher monthly instalments but it reduces the interest burden in the long run.
  • Selecting the appropriate tenure allows an individual to plan their finances effectively and manage other expenses alongside loan repayments.
  • Making a well-informed decision about loan tenure helps borrowers maintain financial stability and achieve their goals without undue stress or burden. This is where LoanTap can be helpful, as it is not just a loan provider but also a partner in financial wellness.


Choosing the right personal loan tenure is a crucial decision that should not be taken lightly. It requires careful consideration of one’s financial situation, goals, and repayment capabilities. By analysing factors such as monthly instalments, total interest paid, and the overall cost of borrowing, individuals can make an informed decision. Balancing between shorter tenures to save on interest and longer tenures for lower monthly payments is essential. Ultimately, selecting a suitable tenure ensures borrowers can manage their finances effectively, maintain financial stability, and successfully repay their personal loans. LoanTap offers longer loan tenure, from 6 months to 60 months, so that lenders can choose their tenure accordingly.