Personal loans are a reliable solution for individuals who require financial support for different reasons. The amount of a personal loan depends on factors such as the borrower’s credit history, income, and the policies of the lender. Various lenders have varying loan amounts, and repayment periods typically range from one to seven years, although there may be options for longer or shorter terms based on the lender and borrower’s preferences. Personal loans provide flexibility, enabling borrowers to select an amount and repayment duration that align with their requirements and financial capacity. Check out LoanTap’s Personal Loan Offers to get a personal loan at low interest rates.
Personal Loan Amount
The amount of a personal loan is the sum of money borrowed from a lender to meet personal financial needs. For the borrower, it is the principal amount of the loan, on which he/she must pay interest while repaying the loan.
The loan amount is usually determined through an evaluation of the borrower’s financial profile and the purpose for which the loan is being taken. Borrowers should carefully assess their financial situation and borrowing needs to determine the appropriate personal loan amount that they can comfortably repay within the agreed-upon terms.
LoanTap provides personal loans ranging from Rs. 50,000 to Rs. 10,00,000 on the basis of your requirement.
Personal Loan Repayment Tenure
The repayment tenure of a personal loan is the period of time over which the total loan amount due needs to be repaid by the borrower. Over the repayment tenure, the borrower needs to pay off not only the principal amount borrowed, but also the interest accrued on that amount. Typically, repayment tenures range from one to seven years, though this can change depending on the lender’s policies.
Shorter tenures may require higher monthly instalments but result in lower overall interest payments, while longer tenures spread out the repayment over a more extended period but may accumulate higher interest costs. You need to carefully assess your finances before you apply for a loan so that you can make sure that you will be able to repay the loan as per the agreed schedule.
LoanTap offers a longer loan tenure. It gives borrowers the flexibility to choose from 6 months to 60 months, making EMIs more affordable.
Factors To Consider While Selecting Personal Loan Tenure
Current Monthly Expenses
Make sure that you carefully analyse your current monthly fixed and variable expenses as a percentage of your monthly income. This will give you an idea of the amount of additional expense you can take on towards repaying the loan. The lower your monthly expenses as a percentage of your income, the higher the loan you can get.
While analysing your monthly expenses, make sure to include any and all outstanding debts as well. Consider the overlap in the repayment tenure. For example, you might currently have an EMI of ₹10,000 on another loan, with 12 payments still remaining. Hence, for the next year, you will need to factor in that additional ₹10,000 expense as well.
The more accurately you know your monthly expenses, the better your chances are of repaying the new loan smoothly.
Prospective Increase in Income
If you are expecting an increase in your income, either due to a raise in your salary or through your business, it might make sense for you to opt for a shorter repayment period. This can result in long-term savings. By paying more each month now, you will knock off the loan sooner, and you’ll get to keep more of your increased income later. This way, the initial pinch of higher monthly payouts will be compensated for down the line when you’ll get to keep more or even all of the increased income.
Existing Debts
It is important to incorporate any outstanding debts or responsibilities into your repayment strategy. Choosing a repayment tenure that enables you to fulfil your existing obligations alongside the EMIs for your personal loan without straining your income would be a prudent approach in such circumstances.
Personal Loan Interest Rates
The interest rate on personal loans is influenced by the chosen tenure, with longer durations typically associated with higher rates. This is primarily because longer-term arrangements are considered higher-risk investments, increasing the likelihood of payment defaults by borrowers. It is essential to strike a balance by selecting a tenure that aligns with an interest rate manageable for timely repayments.
Conclusion
Personal loan amounts and repayment tenures vary depending on individual circumstances, lender policies, and borrowing needs. It is crucial for borrowers to carefully consider their financial capabilities and goals when determining the appropriate loan amount and tenure. By conducting thorough assessments of their monthly budget, existing obligations, and future income prospects, borrowers can make informed decisions that align with their repayment capacity and minimise overall costs.
