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Loan tenor meaning: the repayment period and how it changes your EMI

Loan tenor meaning: tenor is the length of time you have to repay a loan, usually stated in months. It is set at sanction. A longer tenor spreads the principal over more instalments, so each EMI is smaller, but interest runs for longer, so the total you repay is higher.

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Loan tenor meaning in practice

Tenor and tenure mean the same thing in Indian lending. Tenor counts from disbursal to the last instalment. A moratorium, if the loan has one, is a period inside the tenor when you pay little or nothing towards principal.

How lenders use tenor

Lenders match tenor to what the money buys. Working capital limits are reviewed at short intervals. Term loans for machinery or premises run longer. Scheme rules can set the range: Stand-Up India loans are repayable in up to 7 years with up to 18 months of moratorium (Stand-Up India portal), and PMEGP loans run 3 to 7 years after a moratorium (PMEGP guidelines compendium).

Example

Same loan, two tenors, example rate 14% a year (Standard loan EMI formula):

Loan Tenor Monthly EMI Source
₹10,00,000 36 months ₹34,178 Standard loan EMI formula
₹10,00,000 60 months ₹23,268 Standard loan EMI formula

The 60-month EMI is lower, but you pay it for two more years. Try your own numbers on the business loan EMI calculator.

Frequently asked questions

Yes. Both words mean the repayment period of a loan.

No. Each EMI is smaller, but total interest is higher because you borrow for longer.

Usually yes. Whether a charge applies depends on the loan type and lender, so check your Key Fact Statement.

Sources

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