Is Personal Loan EMI Cheaper with Longer Tenure? Know the Hidden Cost

A smaller EMI may look attractive now, but it often hides a much bigger cost. Personal loan borrowers must check how tenure quietly shapes total repayment.

In India, many people now rely on personal loan options to manage big purchases or emergencies. The EMI plan looks tempting, a few clicks and the money is ready. But the real question is: is personal loan EMI better when stretched across years?

People often assume that lower EMI means a cheaper deal, but that’s not the whole story. A longer loan may offer short-term relief but lead to higher interest payments. Let’s break it down simply.

More Indians Are Choosing Long-Term Loans, But At What Cost?

In April 2025, personal loan disbursals in India reached ₹13.7 lakh crore. However, growth slowed to 13.8%, showing that people are borrowing more carefully.

This trend suggests that borrowers are becoming more mindful of their repayment capacity, leading to more balanced and responsible borrowing habits. Many borrowers are picking longer EMIs to reduce monthly pressure. But when stretched too far, interest eats into savings.

EMI Vs Interest: The Math Behind Tenure Choices

Short tenure means high EMI, but less total interest. Long tenure means low EMI, but more interest. Simple, right? But few actually check how big the final repayment becomes.

A 2025 report by Paisabazaar gave this breakdown for a ₹2 lakh personal loan at 10.5%:
 

This shows how loan duration affects interest costs. The loan becomes almost one and a half times more expensive, just because of tenure.

Can You Reduce Tenure Without Changing EMI?

LoansJagat's May 2025 article shared another example. A borrower made a part payment but kept the same EMI. That lowered the tenure and saved interest.
 

The difference? ₹27,000 saved. Same EMI. Just fewer months. Not many think of it, but this is one way to reduce interest without increasing monthly burden.

RBI Now Asks Banks to Be Transparent with EMI Terms

In January 2025, the Reserve Bank of India directed lenders to clearly share EMI schedules, rate changes, and repayment options. Many banks used to quietly increase loan tenure when interest rates changed, and borrowers didn’t even notice.

A 2024 MOSPI report showed a shift: 28% of urban borrowers between 2019–2022 chose tenures beyond five years. In 2015, it was just 13%. So, habits have changed, but not always for the better.

Next time someone asks, is personal loan EMI with longer tenure really helpful, the answer must include these hidden facts.

Conclusion 
 

A ₹3,000 EMI may feel easy today, but it stays on your record for years. Many people compare mobile phones or insurance policies in detail, but sign a personal loan form without reading the repayment schedule. That’s where the real cost lies. 

When someone wonders if a personal loan EMI is a good deal, they must check how much the full repayment will be. The next time anyone asks is personal loan EMI with low monthly payments a better option, tell them to do the full math. It makes all the difference between smart borrowing and silent overspending.

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About the Author

LoansJagat Team

‘Simplify Finance for Everyone.’ This is the common goal of our team, as we try to explain any topic with relatable examples. From personal to business finance, managing EMIs to becoming debt-free, we do extensive research on each and every parameter, so you don’t have to. Scroll up and have a look at what 15+ years of experience in the BFSI sector looks like.