How to Choose Personal Loan Tenure According to Your Repayment Capacity?

A personal loan is taken up to meet the unforeseen expenses that come up anytime. With limited access to fund after expenses, you go through a financial crisis. It is a personal loan that can help you through thick and thin. A personal loan is taken to cover up all the expenses that you were not ready for. For all unplanned emergencies and needs, you need a personal loan. However, debt is a responsibility. If you are borrowing from a financial institution, it becomes your duty to return it within the tenure. Repayment is the word that you must stay aware of when you borrow. In a personal loan, you choose a fixed tenure for repayment. Based on what do you choose the personal loan tenure? It should be decided based on your repayment capacity. If you can pay a high EMI, you can go for a short-term loan, and if you can pay a low EMI, you need a long-term loan. The repayment capacity of the borrower should be the main factor that decides your tenure. It helps you to finish off your debt on time without being a default.

What is short term loan?

An instant personal loan online can be taken for two consecutive terms. You can either go for a long-term Personal Loan or a short-term loan. In a short term, you choose tenure of 3 years. Within that tenure, you need to finish off your loan. When you choose a short-term loan, the EMI for every month will be high. Are you capable of paying high EMI every month? This question will get you the answer. If you feel you are capable to pay a high EMI after all your expenses, you can go for a short-term loan. In a short-term loan, the debt quickly finishes off and you can then enjoy a debt-free life.

What is a long-term personal Loan?

A long-term personal loan is taken when it is more than 3 years. It goes on for 5 years and more. The long-term personal loan is taken up when your repayment capacity is low. If you feel your income is not a very good one, you need a long-term loan. In a long-term tenure, your EMI will be much low than that of a short-term. Here you can enjoy low EMI and keep paying it without any hurdle. You can easily meet your expenses and obligations and go for easy repayment. When you feel that you need a low EMI for every month, increase the tenure of the loan.

Expenses to consider understanding repayment capacity

Your repayment capacity will completely depend upon your monthly income and your expenses. When you are taking a personal loan, your income or your expenses will not be affected. It will just be a new addition of fixed obligations to your existing expense. The income that you were having daily will stay the same. There are some fixed obligations that you cannot forget. Fixed obligations like rent, education, grocery, utility bills, and many other things are a necessity. After taking these expenses, how much extra money are you left with? What about your savings? Considering all these, you need to find out your repayment capacity.

  • Fixed obligations: The fixed obligations will not change under any condition. You cannot miss or delay your rent, utility bills, and grocery in a month. You need to consider this out from your income so that you know what you are left with. Fixed obligations cannot be ignored and you need to keep them in mind while you decide your repayment capacity. If you feel your fixed obligations are taking up your entire income, you should not go for a loan. On the other hand, if you see only a very small amount of fund is left after paying for all the obligations, you need a low EMI amount. In that case, you should go for a short-term personal loan. This will help you keep a good balance.
  • Savings: After your fixed obligations, you must save a small part of your income without fail. You need to consider the savings while choosing your repayment capacity. If you find that after all your fixed obligations, there is very little fund for savings, you should not get into debt. However, if there are enough funds after all expenses and savings, you can go for a short-term loan with a big EMI to finish off debt. For a small disposable amount, you can surely choose a long-term loan that gives you low EMI.

Wrapping up

Go for an instant personal loan online when you need instant cash in your account. A personal loan is flexible and you can use the fund for everything. However, when you are borrowing, you need to be responsible for the repayment capacity. Choose the right tenure so that your EMI is comfortable and you don’t face any burden.



Washim is an Bangladeshi web blogger. Right now he writes for wazmagazine.com excellent content Business, Digital Marketing, Entertainment, Fashion, Foods, Games, Health, Life Style, Sport and much more.

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