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Personal Loan

How to choose the maximum tenure for Personal Loans?

Summary: Personal loan maximum tenure means a higher median borrowing rate & expected benefits. Read on how to choose the Maximum Tenure for Personal Loans.

13 Oct 2021 by Team FinFIRST

Your personal loan tenure is more valuable than it seems. Read on to know how to choose the best personal loan tenure


Personal loans are unsecured loans. They are useful in times of need and come with no end-use restrictions. While they are costly than other loan types, the EMI amount and loan term are customisable. You can adjust the loan term, which helps mitigate diverse financial situations.

However, it does not mean you should choose a longer term with lower EMIs or vice versa. They may negatively influence your finances and credit score. With a shorter term, you will need to set aside money for instalments. A personal loan maximum tenure, meanwhile, means a higher median borrowing rate.

Importance of choosing the right personal loan tenure


Choosing the correct tenure allows you to pay your EMIs. Here are some of the additional advantages:

  • It aids in the development of a favourable credit record and a higher credit score, allowing you to get competitive interest rates on future loan applications.
  • It gives you the assurance that you can efficiently manage your own finances while also fulfilling your other financial objectives.

 

 

How to choose the best loan duration?


It is not wise to go with the maximum personal loan tenure. Follow this guide, instead, for choosing the best loan duration:

Know your monthly expenditure


Analysing your expense and saving rates is a proven way to establish a suitable personal loan maximum tenure and EMI amount. Before you take out the loan, make a list of your monthly obligations. Consider whether you have any outstanding debts and how long they will last. You can choose your  personal loan amount through an instant loan app and personal loan maximum tenure based on your savings and spending rates. The 50/30/20 rule, wherein you spend 50% of your income to cover fixed and variable expenses, 30% for non-essential expenditures, and the remaining 20% for savings and debt reduction, can assist you in creating a comprehensive repayment plan.

Selecting the personal loan tenure period is critical in ensuring that you receive the expected benefits from the loan.

Understand your loan amount


Your personal loan amount dictates the loan tenure. Aim for a shorter loan tenure for small loan amounts, such as borrowing 2-3 times your monthly income, because a longer personal loan tenure increases your interest cost.

Similarly, if you're borrowing 6-8 times your monthly salary, choose the maximum personal loan repayment tenure. Choosing a short term is a burden that will be difficult to handle.

Gauge your rate of interest


Personal loan interest rates are determined by your credit score, which also influences your personal loan eligibility. You can also check you EMI amount with IDFC FIRST Bank’s personal loan EMI calculator. Simply enter your loan amount requirement. Apart from your credit score, the loan term you choose affects the rate of interest. Shorter loan terms result in lower interest rates, while longer loan terms result in higher interest charges.

If you can avail of some of the best personal loans and are provided with a reduced rate of interest based on your credit score, choose a shorter term to avoid paying more interest. If you have a low credit score, a longer term is preferable, as a shorter term with higher interest payments will affect your finances. Choosing a longer term improves your credit score, which helps with future loan applications. You can combine multiple loan tenures with the desired loan amount to find the loan tenure that works best for you.

Choosing the maximum tenure for a personal loan seems logical, but it can affect your finances. It is also best to apply for a personal loan from proven institutions, as they can provide flexible terms. IDFC FIRST Bank is a worthy contender for instant personal loans. With guidance on how to go about the process and the best course of action for you, IDFC FIRST Bank helps you at every step. You can also check out their other loan options online to get a comprehensive idea about the same.

 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirstbank.com for latest updates.