Whenever financial emergencies strike and we need funds, a personal loan is certainly one of the most accessible forms of credit, especially through ways like the availability of HDFC personal loan online. Neither does it require collateral/security nor any restriction on the end-use of the loan amount. And even its disbursement is faster than most other loan options, and HDFC personal loan payment can easily be made in EMIs, with tenures going up to 5-7 years for various banks and NBFCs. Given that choice of tenure plays a key role in determining your monthly EMI payout, let’s explain to you how to choose the right personal loan tenure to ensure comfortable EMIs without harming or stressing your financial health.
First, jot down your existing recurring expenses.
When planning to avail of an HDFC personal loan online, the first step towards finalizing your tenure is jotting down your existing monthly expenses, including utility bills, SIPs, insurance premium, rent etc. This helps to know your remaining disposable income as per which you can ascertain your EMI amount that would be comfortable to repay, and hence choose the tenure accordingly. Remember, the longer the tenure shorter the EMI amount, and vice versa.
Ascertain your present and expected liabilities
Once you have ascertained the recurring expenses, factor in your liabilities as well, like loan EMIs, as this would help in deducting that from your monthly income to arrive at the remaining money from which you would make the HDFC personal loan payment. Note that selecting the right personal loan tenure would leave space to fulfil your existing liabilities and other regular expenses instead of congesting it further. That’s why even lenders factor in your existing debt to income ratio when evaluating repayment capacity, as a higher presence of existing EMIs increases the likelihood of irregularities, or at worse, loan default.
Compare the interest cost of different tenures.
During the process of deciding the right tenure for your HDFC personal loan online, the next step is to compare the total interest payout for different tenures. While a long tenure gives you smaller EMI amounts, it involves higher interest cost, whereas shorter tenure gives bigger EMIs but lower interest payout too. So it is all about what EMI amount suits your repayment capacity the best, for which you would be able to make comfortable HDFC personal loan payment without stressing your financial health too much. You can make use of the online EMI calculator tool to know the right EMI as per different tenures, besides knowing the overall interest payout as well for different tenures.
Factor in your expected future financial position
While this may not be easy, but not impossible as well; suppose you expected cash inflow due to bonus or promotion or sale of assets or investment redemption, a factor that is in when finalizing your tenure for HDFC personal loan online. After all, as shorter tenures provide lower interest costs, it is better to choose that if your expected financial position allows you to do that. You would then be able to complete the personal loan payment earlier instead of stretching it for a long tenure and burdening your finances for higher periods.
Carefully read the terms and conditions.
Before you go ahead to finalize a tenure and start making the HDFC personal loan payment, ensure to factor in the terms and conditions as well. Reading the fine print will prevent you from having any regrets later on. After all, the fine print might include some fees or conditions which can hurt you later as you didn’t pay attention to them when taking the HDFC personal loan online. Also, remember-prevention is better than cure!
Compare tenures of different lenders.
Personal loan tenures of all lenders are not the same, neither is the range for minimum and maximum tenure. And with tons of lenders like banks, NBFCs and fintech offering personal loans, it becomes prudent to compare the range of personal loan tenure offered by them before zeroing in on any. Some lenders may offer a range of 3 months to 3 years, whereas some others may offer 6 months to 5 years or even up to 7 years. It’s all about choosing the right tenure as per your financial position and capacity, which can be possible when you compare the available tenure options of multiple lenders.
Part prepayment and foreclosure fees and conditions
The partial prepayment and foreclosure conditions of HDFC personal loan online can play a vital role in anchoring your decision of selecting tenure. Many lenders involve a lock-in period in prepayment conditions of personal loans, implying you cannot repay the loan to reduce the interest cost before the lock-in period ends. So, if you ignore this prepayment conditions aspect, you cannot avail the benefit of prepayment during the lock-in and other conditions even if you have surplus funds to reduce your total interest cost. Hence, read all such foreclosure and prepayment conditions beforehand and then choose the tenure which suits you the best overall.
For instance, you took the personal loan, but you also know you will be getting a lump sum payment very soon that will help you pay back your loan in like 1 year. Now, if the bank has a lock-in period, you cannot prepay and close the loan despite having funds to make the HDFC personal loan payment. And that’s because you failed to pay attention to the foreclosure and prepayment terms when it mattered the most.
Summing it up, all these steps are pivotal in the process of choosing the tenure for your personal loan. Don’t believe the hearsays or biased opinions blindly or the sales pitches, and instead follow all these steps and choose the tenure as per your financial position and repayment capacity. Remember, the tenure choice directly impacts your EMI amount, hence do not ignore this aspect and regret it later on! Choosing the right tenure can go a long way in helping you make comfortable EMI payments and balance the interest cost aspect as well.
