What Is Loan Tenure?

Loan tenure, also known as the loan duration, refers to the time period over which you repay a loan. Whether it’s a home loan, car loan, or personal loan, understanding the tenure is crucial. It directly impacts your monthly budget, total interest paid, and overall financial planning.

Key Terms Explained:

1. Loan APR (Annual Percentage Rate):

• The Loan APR represents the annualized cost of borrowing.
• It includes not only the interest rate but also any additional fees or charges.
• A lower APR is generally more favorable for borrowers.

2. Total Interest Payable:

• This is the cumulative interest amount you’ll pay over the entire loan tenure.
• Reducing the loan tenure can significantly lower the total interest paid.

3. Total Payment (Principal + Interest + Fees & Charges):

• The total payment encompasses the following:
  • Principal Amount: The initial loan amount borrowed.
  • Interest: The cost of borrowing.
  • Fees & Charges: Additional costs associated with the loan.

How to Use the Loan Tenure Calculator:

1. Enter Loan Amount:
   • Input the amount you plan to borrow (e.g., for a home loan).
2. Interest Rate (%):
   • Specify the annual interest rate offered by the lender.
3. Fees & Charges (if any):
   • Include any processing fees, prepayment charges, etc.
4. Choose EMI Scheme:
   • Decide whether you want EMI in advance or arrears.
5. Click Calculate:
   • The calculator will display essential details, including EMI, Loan APR, total interest payable, and total payment.

Why Reduce Tenure?

• Shorter tenure:
  • Pros: Reduces overall interest burden.
  • Cons: Higher EMIs.
• Longer tenure:
  • Pros: Lowers EMIs.
  • Cons: Increases total interest paid.
• Use the calculator to strike the right balance based on your financial goals.

Example Scenario:

Suppose you’re taking a home loan of ₹10,00,000 at an interest rate of 11.19% for 20 years (240 months). Here’s a breakdown:

• Loan EMI: ₹21,617.95
• Loan APR: 11.19%
• Total Interest Payable: ₹2,97,077
• Total Payment (Principal + Interest + Fees & Charges): ₹13,07,077

Calculating Loan Tenure from EMI:

• If you know the EMI and interest rate, you can calculate the loan tenure using the following formula:
  • Loan Tenure (in months) = Total Loan Amount / (EMI × 12)
  • Adjust the formula based on your specific EMI frequency (monthly, quarterly, etc.).

Explore Different Scenarios:

• Use online tools like EMI Calculator for personalized calculations.
• Remember, informed decisions lead to better financial outcomes. 

Feel free to reach out if you have any further questions!