When you are looking to borrow money for your needs, you are generally worried about just two things: EMIs and Tenor. Isn’t it?

But there is another 3rd thing that should also be your concern. And that is your total interest outgo.

Your main focus of getting your EMIs reduced can come in way of your financial well-being. It is true that lower EMIs mean a more comfortable and less stressful life. But it also means that you will end up paying higher total interest during the loan tenor. How? Let’s take an example.

Let us suppose that you decide to take aRs 4 lac personal loan. The lender is ready to give you the loan at 16%. Now you want to go in for a low EMI. But the rate of interest is fixed. So the only option left is to change the loan tenor.

And this is how your tenor effects your EMI:

 EMI for 3 years – Rs 14,063

EMI for 4 years – Rs 11,336

EMI for 5 years – Rs 9,727

But what about interest outgo which we mentioned earlier?

Total Interest Paid for 3 years – Rs 1.06 lacs

Total Interest Paid for 4 years – Rs 1.44 lacs

Total Interest Paid for 5 years – Rs 1.83 lacs

So it’s clear from the above if you focus solely on getting a lower EMI, you will end up paying higher total interest. So if you can manage to pay higher EMIs without stressing yourself out too much, then you should indeed try and take a loan for shorter tenor. It will help you save thousands of rupees.

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