₹5 Lakh Personal Loan at 5-Year vs 3-Year Loan Tenure: See What Changes in EMI & Interest?

Personal loans are often the go-to solution for funding emergencies, big purchases, weddings, or even debt consolidation. However, choosing the right loan tenure is key to balancing your monthly EMI burden and the total cost of the loan.

Here, we use an EMI calculator to compare how a ₹5 lakh personal loan at 14% annual interest works out over two loan tenures – 3 years and 5 years.

Scenario 1: ₹5 Lakh Loan at 14% for 3 Years

If you choose a 3-year tenure, your monthly EMI would be around ₹17,089.

• Total repayment: ₹6,15,197
• Total interest paid: ₹1,15,157

A shorter loan term like this helps you pay off the loan quickly and reduces the overall interest outgo. However, the higher EMI can be challenging if you have other fixed expenses or an irregular income stream.

Suitable for: Borrowers who can afford a higher EMI and want to reduce their long-term interest burden.

Scenario 2: ₹5 Lakh Loan at 14% for 5 Years

Choosing a longer 5-year tenure brings down your EMI to around ₹11,634.

• Total repayment: ₹6,98,048
• Total interest paid: ₹1,98,048

While the monthly EMI is significantly lower, the longer duration means you end up paying more in interest compared to the 3-year loan. This option may appeal to those looking for smaller monthly payments and more breathing room in their monthly budgets.

Suitable for: Borrowers who prefer financial flexibility and a lower EMI even if it means paying more over time.

What Should You Consider Before Choosing?

When deciding between a 3-year and 5-year loan tenure, consider:

• Monthly cash flow: Can you afford a higher EMI comfortably?
• Total interest cost: Is minimising interest more important than lower EMIs?
• Income stability: Do you have a steady income or expect increases in the near future?
• Loan purpose: Is the loan for something time-sensitive or essential?

Using an EMI calculator helps visualise how much you’ll be paying monthly and in total, helping you align your choice with your financial situation.

Read More: Planning a Trip? ₹75,000 vs ₹1.5 Lakh Personal Loan at 12% – Which Suits You Better?

Conclusion

Whether you choose a 3-year or 5-year term, both options have their pros and cons. The 3-year plan saves you money in interest, while the 5-year plan offers lower EMIs and more breathing space.

Evaluating your financial goals and repayment capacity using an EMI calculator is a smart step toward choosing the most suitable personal loan structure.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.