Both short and long term personal loans can pull you out of a financial loophole by making it easier for you to repay the debt in a regulated and periodic fashion. However, the preference towards either of the credit lines depends on the requirements, nature of the emergency and the amount necessary to get out of a pressing situation.
When to opt for a long-term personal loan?
Most digital lenders and existing NBFCs offer both long and short term credit lines. Selecting the loans with longer repayment tenure is advisable if you are planning to:
- Get access to a larger amount
A long term personal loan is recommended if you require a large amount to handle the financial emergencies
- Reduce the burden of repayment
A longer tenure ensures that the loan amount is repaid gradually, which puts less burden on your existing finances, owing to the smaller and virtually insignificant EMIs.
- Improves credit score
Timely payments associated with long-term loans can positively impact your credit score, which eventually improves your loan eligibility in the future.
Personal loans with longer tenures can burn a hole in the pocket, courtesy of the higher interest rates. However, the lender diversity allows you to get hold of competitive rates, provided you have access to the personal loan interest calculator to ascertain the expected rates based on different eligibility factors.
Nonetheless, a long term loan keeps you in debt for an increased period and even lowers your eligibility to push forth for a new credit line, if and when necessary.
Additional Read: How to Improve your credit score before you apply for a Personal Loan
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