Is a ₹1.5 Lakh Loan Better for Short-Term or Long-Term Needs?
When you want to borrow money, one of the first big questions that comes up is, “How long do I need to pay it back?” This is a really important decision, and it’s going to depend on why you need the money. Like the name suggests, a personal loan for 150000 can be utilised for any number of purposes. It can be for something you require immediately or in the next few months.
This decision between a short- or long-term loan can make a big difference, determining everything from how much you pay each month to the cost of your borrowing overall. In this blog, we will look at when it is smart to use a 150000 Personal Loan for a short-term need and when it’s better for a long-term goal.
1. The Case for a Short-Term Loan
A long-term loan is a loan that you pay back over a long period, such as more than one year, and often up to 5 or 7 years.
- Lower Monthly Payments: The most common reason that individuals prefer long-term loans is that they offer lower monthly payments. Your monthly EMI is calculated by dividing the loan amount by the tenure, so when you spread the loan over more months, your EMI becomes significantly less. This is one way to manage a monthly budget and avoid stress.
- Get Rid of Debt Faster: You can become debt-free in a short amount of time. This is a great feeling. You will not have the loan hanging over your head for many years. You can then use your money for other purposes, such as saving or investing.
- For Small, Quick Needs: This is a good choice for one-time expenses, such as a sudden medical bill, a family wedding, or an emergency car repair. For a small need, like a 2000 personal loan, you would always choose a short-term plan. For a bigger one-time need like a 150000 personal loan for a sudden expense, a short-term loan might also be a good idea, as long as you can afford the monthly payment.
The Big Problem with a Short-Term Loan: The biggest problem is that your monthly payments (EMIs) will be very high. Since you are paying a lot of money in a short time, you have to be sure you can afford the payments without any stress. If your EMI is too big, it can be hard to pay your other bills.
2. The Case for a Long-Term Loan
A long-term loan is one that you pay back over a longer period, usually more than one year, and sometimes up to 5 or 7 years.
- Lower Monthly Payments: This is the main reason people choose a long-term loan. This means that if you extend the loan term, your EMI goes down, making it easier to handle. It’s a wonderful method for maintaining (and reducing) your monthly budget without feeling stressed.
- For Bigger, Long-Term Goals: A long-term loan is a great fit for a big, planned expense. You can use a 150000 personal loan for a bigger goal like a home renovation, paying for a course or education, or consolidating other, more expensive debts, like credit card debt.
- More Flexibility: A reduced EMI provides you with more flexibility to save money every month for other purposes. You can focus on other financial needs without the burden of knowing all your money is going toward the loan. One such company is Stashfin, which offers you so many options to choose the best possible loan plan for yourself.
The Big Problem with a Short-Term Loan: The biggest disadvantage of doing a loan out for such a long period is that you will pay far more in the end in total interest. In the end, you may owe a lot more than what you borrowed because of the interest. You’ll also be in debt for a longer time, which could make it harder for you to get other loans in the future.
3. How to Make the Right Choice
Based on what you need, you should pick between a short-term and a long-term loan app. You have to think about your own financial life. Here are some questions to ask yourself:
- What is your goal? Is it for a one-time need or a big project?
- How Much Can You Pay Each Month? Use an online EMI calculator to see what your monthly payment would be for a short-term plan and a long-term plan. Choose an EMI that you can pay easily without any stress.
- How Much Does It Matter to Be Debt-Free? For a quick escape from your debts, a short-term loan is preferable. If you value low monthly payments and are fine with paying off your loan over a longer period of time, you’re better off with long-term financing.
Conclusion
A 150000 personal loan is a powerful financial weapon, but you need to know how to wield it properly. If you want to address short-term needs and pay less interest over time, consider taking a personal loan with shorter terms that will allow you to repay the balance faster at a much higher monthly payment amount.
Here’s what typically works best: A longer-term loan is better for larger goals (a new house, your kids’ college), and in exchange for lower monthly payments, you’ll pay more in total. There is no single right or wrong answer. The best choice is the one that fits your needs and your monthly budget.
FAQs
Q1. Does a shorter loan tenure always have a lower interest rate?
Not always. The interest rate depends on your credit score and the lender. But in general, a shorter loan tenure usually means you pay less total interest because the loan is active for a shorter time.
Q2. Can I pay my long-term loan back early?
Many lenders allow you to pay back your loan early. You should check if they charge a fee for this. Paying back early can help you save a lot of money on interest.
Q3. How does a long-term loan affect my credit score?
A long-term loan can be very good for your credit score. If you make all your payments on time over many months, it shows that you are a very responsible borrower, which helps your score a lot.
Q4. Is a personal loan for ₹1.5 lakhs a good idea for a car purchase?
A personal loan can be used for a car purchase, but you might find a car loan to be a better option. A car loan is a secured loan (the car is the guarantee), and it usually has a lower interest rate than a personal loan.