We help you with five tips to choose the right personal loan tenure:
- Assess your monthly budget: One of the first factors to consider when choosing the right personal loan tenure is understanding your monthly budget. Note down all the monthly commitments, from bills and salaries to leisure expenses. This will help in understanding the residual income and choose the appropriate tenure basis your EMI you can afford.
- Consider your existing liabilities: Another important factor that must be looked into when choosing the right personal loan tenure is considering your existing liabilities. Make sure after calculating your existing liabilities, you have enough room for your regular expenses. Please keep in mind the DTI ratio when doing so.
- Use an EMI calculator: An EMI calculator helps in assessing the monthly instalments basis the loan amount and interest rate to give an all-round view in making the right decision. A personal loan calculator is a key tool which must be used while choosing the personal loan tenure.
- Assess your financial aspects: If you are a salaried individual or a businessperson, please assess if you would be able to accommodate a higher EMI every month. While this may act as an extra burden, it can help in reducing the interest cost and help in repaying the loan early.
- Calculate the interest cost: Once you know the personal loan interest rate, make sure you calculate the interest cost using various combination of tenure options to understand the charges involved in the loan. Naturally, a loan with a longer tenure period will incur higher interest cost whereas a lower tenure period will incur lower interest cost but a higher EMI.
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The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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