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Is Personal Loan with Longer Repayment Term a Better Choice?

Personal Loan


Is Personal Loan with Longer Repayment Term a Better Choice?

Personal loans are ideal financing solutions to cover unexpected expenses such as holiday or renovation costs, medical bills, weddings, and other events. They offer benefits such as flexible lending terms, lower interest rates, and convenience.

Moreover, quick approvals for personal loans make these a good choice for many. They offer flexible repayment terms that allow borrowers to repay the loan over a fixed duration or tenure.

However, are you wondering whether a personal loan with a longer repayment term is better than one with a shorter term?

It is about finding the right loan product for one’s situation and getting the lowest personal loan rates. One may be able to find a loan that suits their needs with a shorter repayment term, or they might prefer a longer one. 

In either case, you must thoroughly investigate all financing options before applying.

What advantages do personal loans with longer repayment terms have?

Personal loans with longer repayment terms have several advantages. These are: 

  1. Higher loan amount

Compared to a short-term loan (with a shorter tenure), a long-term personal loan provides an applicant with a higher loan amount.

If they take out a long-term loan, they will have a larger loan amount at hand and lower EMIs. 

They receive a larger loan amount from lenders because the tenure is longer. 

With Fullerton India, a reputable lender, borrowers can avail of loans up to Rs. 25 lakhs for their financial needs, with competitive interest rates, personal loan quick approval, and flexible repayment tenures ranging from 12 to 60 months

  1. Lower EMI burden 

An additional advantage of getting a longer-term loan is its reduced EMI burden. 

A longer-term loan would require smaller installments spread over a longer duration, reducing the EMI burden. However, short-term loans have high EMIs as the tenure is short. 

A long-term loan helps borrowers manage their finances better by reducing the burden of monthly EMIs. Moreover, a low EMI burden means the chances of missing EMIs are lower.  

  1. Increased likelihood of timely EMI payments

Through more disposable income, a lower EMI payment lessens the strain on a person’s finances. It aids in lowering the likelihood of EMI defaults due to unanticipated financial hardship.

  1. More flexibility 

Long-term loans give borrowers more flexibility, as opposed to short-term loans. 

Even if borrowers select a longer repayment period, they are not required to pay off their loans in full within that period. If they have excess money, they could decide to make pre-payments. 

However, if a person believes they might pay off their loan early, double-check to ensure there is no prepayment penalty.

  1. Helps build a credit score 

Another benefit of opting for a longer-term loan is that it helps improve one’s credit score. It is because the longer the loan tenure, the less likely one is to default on the loan. 

By paying back the loan as per the repayment schedule, they show the lender that they are responsible borrowers who will pay off their debts when due.

What drawbacks do personal loans with longer repayment terms have?

Some of the drawbacks of longer repayment terms are:

  1. High-interest cost 

Long-term loans have longer terms, which results in more monthly interest payments. It accumulates to a substantial sum over time, raising the cost of the personal loan.

Thus, lenders demand a higher rate, making the loan significantly more expensive. 

  1. Take longer to become debt-free 

If a person plans to borrow money and repay it over time, extending their loan term will increase the time it takes to pay off the borrowed amount. 

As a result, it means the person will end up repaying more money in total. 

  1. Decreases your credit limit 

The lender will consider applicants’ debt-to-income ratio before they approve their loan request. A long term personal loan could lower their credit limit and disqualify them from receiving further loans.


The choice between a long and a short-duration loan depends upon the borrower and their financial status, including their budget, ability to make a monthly payment, and financial goals.

Choosing a longer repayment tenure means one will be charged higher interest rates during the loan period. On the other hand, choosing a shorter loan tenure means the lowest personal loan rates, and they will get to repay the total amount within a short period. 

Thus, think carefully about which will be most advantageous in your specific circumstance before deciding whether you want a short-term or long-term loan.

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