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Home » A Simple Guide on How to Effectively Handle Long-Term Personal Loans in 2024

A Simple Guide on How to Effectively Handle Long-Term Personal Loans in 2024

Personal loans might be a convenient option for funding unexpected medical expenses or debt repayment. You may even request personal loans to satisfy some of your desires. These may be the arrangements for your dream wedding. Sometimes, you even look to purchase technology devices like laptops and smartphones with a personal loan.

Personal loans are those given out without any security or collateral. These are designed to help people with many different kinds of financial requirements, including debt consolidation, special occasions, and trips abroad.

“Long-term loans are defined as those with repayment terms of three years or more. Therefore, unsecured personal loans with repayment terms longer than three years are considered long-term loans.”

Key Highlights of Long-Term Personal Loans in 2024

BankMinimum Salary per MonthLoan AmountLoan TenureRate of InterestCIBIL SCOREProcessing Fees
Bajaj Finserv PrimeRs. 38.00kRs. 1.00L – Rs. 35.00L12 – 84 Months13.5% – 15%685 or above0.5% – 1.5%
ICICI BankRs. 40.00kRs. 1.00L – Rs. 1.00Cr12 – 72 Months10.5% – 15%700 or above0.5% – 1.5%
HDFC BankRs. 25.00kRs. 1.00L – Rs. 1.00Cr12 – 72 Months10.25% – 16%700 or above0.5% – 1.5%
Shri Ram FinanceRs. 25.00kRs. 1.00L – Rs. 25.00L12 – 72 Months13% – 16%
PaysenseRs. 20.00kRs. 50.00k – Rs. 10.00L6 – 60 Months18% – 22%700 or above2% – 5%
Money ViewRs. 15.00kRs. 5.00k – Rs. 5.00L3 – 60 Months17% – 36%650 or above1% – 5%
IDFC BankRs. 20.00kRs. 1.00L – Rs. 40.00L12 – 60 Months10.49% – 22%700 or above1% – 4%
InCredRs. 15.00kRs. 50.00k – Rs. 10.00L24 – 60 Months16% – 33%650 or above1% – 5%
Aditya BirlaRs. 20.00kRs. 1.00L – Rs. 50.00L12 – 84 Months12% – 28%650 or above1% – 4%
FinnableRs. 20.00kRs. 50.00k – Rs. 10.00L12 – 60 Months16.95% – 30%700 or above1% – 5%
Hero FincorpRs. 15.00kRs. 50.00k – Rs. 10.00L12 – 60 Months9.5% – 16% (Flat)700 or above
Muthoot FinanceRs. 20.00kRs. 1.00L – Rs. 7.50L12 – 60 Months14% – 22%685 or above1% – 3%
Tata CapitalRs. 25.00kRs. 75.00k – Rs. 25.00L12 – 60 Months10.5% – 14.25%720 or above0.75% – 2%
Standard CharteredRs. 50.00kRs. 1.00L – Rs. 1.00Cr12 – 60 Months11.49% – 20%740 or above1% – 3%
Axis BankRs. 25.00kRs. 1.00L – Rs. 40.00L12 – 60 Months11.15% – 16.25%690 or above1% – 4%
FullertonRs. 25.00kRs. 1.00L – Rs. 25.00L12 – 60 Months14% – 32%705 or above1% – 3%
HDFC BankRs. 25.00kRs. 1.00L – Rs. 1.00Cr12 – 72 Months10.25% – 16%700 or above0.5% – 1.5%
FlexSalaryRs. 8.00kRs. 4.00k – Rs. 2.00L6 – 60 Months1.5% – 3% (Fixed)550 or aboveRs. 300 – Rs. 750
Kotak BankRs. 25.00kRs. 1.00L – Rs. 50.00L12 – 60 Months10.75% – 22%705 or above0.75% – 2.5%
CholamandalamRs. 20.00kRs. 1.00L – Rs. 35.00L6 – 60 Months14% – 22%675 or above1% – 3%
SBMRs. 20.00kRs. 50.00k – Rs. 25.00L6 – 60 Months14% – 20%700 or above1% – 4%
Axis FinanceRs. 50.00kRs. 1.00L – Rs. 50.00L12 – 60 Months14% – 16%650 or above1% – 3%

Why Are Personal Loans the Best Option in Financial Shortfalls?

Personal loans are flexible financial instruments. These enable people to meet a range of requirements and objectives. It’s necessary to comprehend the distinctions between long-term and short-term personal loans.

Whatever your needs may be—whether you’re trying to finance an expensive item, pay for unforeseen bills, or consolidate debt— Let’s take a closer look at these two loan alternatives. Therefore, you can decide which one best suits your financial situation.

A personal loan of any term can be taken out that fits your specific requirements and circumstances, among other things. A long-term loan will feature a lower monthly installment (EMI) but a shorter interest rate. Before choosing between a short-term and long-term loan, focus on the matters mentioned below.

Emergencies can arise at any time, so having a backup plan is crucial in case one occurs. This explains the current boom in the popularity of personal loans.

These loans are usually granted with no collateral requirements. These are promptly disbursed within a few days. To be eligible for such a loan, all you need is evidence of income and a good credit score.

Things to Look Into Before Taking Out a Long- or Short-Term Personal Loan

  • Loan size: A short-term loan can be more advantageous if you are only looking for a small amount of funds. Larger sums are usually the subject of long-term loans. Additionally, long-term loans raise your overall interest rate.
  • Interest Rates: Long-term loans typically have lower interest rates than short-term loans. It is crucial to check the rates for both term loans. Your credit score and other variables may affect these rates.
  • Repayment Term: Long-term loans might last up to multiple years. Short-term borrowings usually have repayable periods of just a few months to twelve months. A long-term loan can be more beneficial if you require a longer period to repay the debt.
  • Charges and Penalties: Look for any other costs or penalties related to the loan. These may be origination, late, or prepayment penalties. Compared to long-term loans, many short-term loans may involve more costs or penalties.
  • Credit Score: A long-term loan with a reduced interest rate may be a bit more accessible to you, depending on your credit score. If your credit score is poor, you might be better off with a short-term loan.
  • Expected Incentives or Salary Hikes: If you predict getting a bonus or salary hike shortly, you should apply for short-term financing, as you will ultimately be able to repay the loan with the incentive or hike. Because short-term loans have lower interest costs, you may save money on them.
  • Debt-to-Income Ratio: A low debt-to-income ratio can help you control the amount of earnings flowing out. Although short-term loans are less expensive, their large monthly outflow can have an impact on the debt-to-income ratio.
  • Future Goals: Your future objectives will also determine whether you choose a long-term or short-term loan. Ascertain whether you’ll need a new loan soon again. Will you be able to pay other bills in addition to the EMI? You will gain an in-depth awareness of how much EMI you can handle by addressing these questions.

Important Features of a Long-Term Loan

  • Loan Tenure: Long-term loans are often available for terms longer than a year, as long as 20 or 30 years.
  • Interest rates: In India, long-term loans involve less risk, so they have cheaper interest rates than shorter-term loans.
  • Collateral: Many long-term loans in India need collateral, which may be properties, stocks, or gold jewellery, as a security for the financial institution.
  • Loan Size: The loan size for long-term loans in India normally ranges from lakhs to crores. It is generally bigger than that of short-term loans.
  • Repayment: In India, long-term loans generally offer variable terms. Thus, the borrowers get the flexibility to select an instalment amount and repayment period that best fits their budget.
  • Purpose: In India, long-term loans are commonly taken out to finance large expenses. These may be like owning a home, a car, or a business enterprise.
  • Credit score: In India, long-term loans usually need a high credit score. This is because the financial institution will evaluate the applicant’s financial health and long-term repayment capacity.

Applicants of personal loans get numerous benefits. Personal loans can assist with a variety of needs, like paying for medical expenses or arranging for home improvement. Because individuals can select the terms of their reimbursement, personal loans also provide flexibility. They have the option of a longer repayment period or just a few months to pay back the loan.

Extended repayment terms have some disadvantages, even though they could seem like the best choice.

How to Select the Most Beneficial Personal Loan?

Your financial needs, aspirations, and ability to repay the loan should all be taken into serious consideration. When choosing between a short-term or long-term personal loan, these are the matters you have to look into.

Multiple features, perks, and payback terms are offered by both personal term loans. To suit the needs and objectives of each borrower, both types of loans are designed properly. Knowing the distinctions between these two loan alternatives will help you choose wisely.

Always remember to review your options carefully before deciding on these loans. taking into account your repayment capacity, loan preferences, and financial status.

Many factors influence whether you take out a long-term or short-term loan. Your requirements and financial situation play a big role in making decisions. Among the most important variables are the loan size, rates of interest, terms of reimbursement, plans, credit rating, expected bonus, and increase in income. Look into everything, then make your decision.

Pros and Cons of Long-Term Personal Loans

1. You are eligible to take out a maximum sum determined by your current debt-to-income ratio for five years or longer. The majority of the largest banks in India provide five-year loans with maximum amounts of ₹40 lakh.

But you have to be eligible for the loans. You’re able to only borrow a certain amount using short-term personal loans.

1. Your debt-to-income ratio will be assessed by a lender before a loan request is approved. Your credit limit may be impacted by a long-term personal loan. Even so, you may lose your eligibility for future loans.
2. To attain a solid credit score, one must be consistent over time. There are a lot of EMIs associated with a long-term personal loan. It may help you raise your credit score. Paying all of these on time improves your credit standing.2. Personal loans with longer terms cost more than those with shorter terms. Long-term loans have longer terms, which means you have to pay interest each month. Over time, it adds up to a sizable amount, raising the cost of your loan.

3. For a long-term personal loan, the EMI is lower. It releases you from the monetary burden of a loan. Thus, you become free to enjoy your life and achieve your ambitions.3. You will experience a longer-term financial burden if your personal loan term is longer. To guarantee on-time EMI payments, you would be responsible for carefully planning and tracking your monthly expenses. It might be difficult and perhaps result in poor financial planning.
4. Monthly EMI payments over an extended period of time are also a chore. Therefore, consider your present income, funds at hand, and repayment willingness before asking for a long-term personal loan.

In times of necessity, long-term personal loans can be helpful. Their flexibility makes sure that customers don’t feel overburdened by the loan.

How and When Can A Long- Term Personal Loan be the Most Appropriate Solution to Your Financial Crunches?

  • Any firm, startup, or corporation may feel the need for funding. Therefore, it becomes crucial that you handle your money well. Long-term personal loans can be useful in this situation.
  • It is simple to obtain a loan to fund a certain need. Because these loans have low interest rates and can be easily repaid, they are typically obtained on a long-term basis.

  • Typically, when someone wants to launch a business, they search for investors for backing capital. This entails giving up ownership of a certain percentage of your business to the investor. Taking out a loan instead of approaching an investor could be a wiser choice in some circumstances. To meet this specific demand, long-term personal loans are available and can be suitable options for you.
  • A credit score, which is also commonly referred to as a CIBIL score, is typically used for estimating a borrower’s creditworthiness. It is therefore crucial for everyone to keep their credit score high. Repaying the term payments is a simple way to accomplish this.
  • Long-term repayment plans are typically created with the borrower’s earning background in mind. Long-term loans allow individuals to easily repay the loan balance. Having a high credit score is essential when applying for a personal loan or comparable credit. Therefore, monitoring your credit score is a wise move.

Bottom Line

You should be very careful when deciding whether to take out any kind of loan. Because defaulting on one might have negative implications. Therefore, one should consider how they will repay the debt and just take out what is necessary. As we’ve seen, long-term loans provide benefits that can affect both lenders and borrowers. You can handle your money well and establish good credit at the same time.

In India, personal loans are becoming more and more common. The rising popularity can be caused by the many benefits that these loans provide. You can use the funds from a personal loan for any reason you decide. Unlike other types of loans, personal loans feature minimal documentation requirements, fair interest rates, and ease of application.

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