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What Does Loan Tenure Mean And How To Calculate It

SingSaver team

SingSaver team

Last updated 18 July, 2022

Everything you need to know about a loan tenure and how it affects the cost of your loan.

Choosing the type of loan to apply for can be tricky, especially when it comes to determining the term of your loan and its corresponding repayment instalments. Before you make that decision, it’s important to understand your budget and assess your financial prospects. In doing so, you will be able to select a loan that suits your needs with a favourable loan tenure.

In this article, we take an in-depth look at what a loan tenure means and how to calculate it. Read on to learn more about loan tenures and other aspects of loans that are useful to know.

What is a loan tenure?

Loan tenure is the duration it takes for borrowers to pay back a loan and interest. In simple terms, it’s the loan repayment period. Loan tenure varies from one financial institution to the other, but in general, can range from 1 month to 25 years. The bank decides on the tenure after considering various factors.

Apart from the tenure, a loan usually has the following components:

  • An equated monthly instalment (EMI) is the fixed amount you are expected to pay the lender every month to retire the loan.
  • Interest rate is the amount the lender will charge for lending the money.
  • The loan principal is the amount you borrow from a lender.

Loans with an equated monthly instalment will have a predetermined tenure, while the ones with variable repayment amounts will have an approximate repayment period. Mortgages and home loans generally offer longer tenures as compared to other types of loans.

Factors that determine a loan’s tenure

The financial institution determines the loan tenure after considering the following factors: 

Age of the borrower

Banks consider your age before lending you the money you need. People in their 20s or 30s have longer working periods ahead of them, so they can opt for longer tenures of say 20 or 25 years. This is in contrast to those in their 50s who have a few years left until retirement.

When calculating the EMI, financial institutions also consider the borrower's age. A loan with a long tenure has a low EMI as compared to those with a shorter repayment period. With a few years left until retirement, it’s almost impossible to get an extended loan tenure as financial institutions consider it a risk.

Income and expenditure

Your income and expenditure determine your ability to pay the EMI on your loan. The short loan repayment period will result in a higher EMI while the opposite is true. Before you sign on the dotted line, make sure you consider your income and expenditure. Be realistic about the amount you can afford to put towards your loan repayment.

The EMI forms part of your monthly expenses. Make sure you can afford the EMI without straining. It’s important to note that if the interest rates increase during the loan tenure, you will pay a higher EMI. Don’t opt for a maximum EMI; leave some space in your budget just in case the interest shoots up during the loan tenure.

Purpose of the loan

Mortgages and home loans have longer tenures than any other loans. On the other hand, business loans tend to have shorter repayment periods. Long-tenure loans are more “expensive” since you pay more interest than when the tenure is short. 

If you intend to take a business loan you must consider the cost of the loan. The longer the tenure the more costly it may be for your business.

Loan amount

The higher the loan amount, the longer the loan tenure may be. A longer loan tenure reduces the EMI as it is spread over a longer period. It’s important to note that a longer loan repayment period means you will pay more interest.

You can use loan calculators online to get an idea of the loan tenure and the interest you are likely to pay.

How to choose the best loan tenure

The right loan tenure will help you save money, hence it's important to choose the right repayment period. Here are simple steps to follow when determining the right loan tenure.

Make a budget

A budget will help you list all your commitments, and you can compare them against your income. The budget will help you determine how much income is left over and whether you can commit to a loan. In doing so, you can work out the right tenure.

Examine your financial situation

If you expect a windfall in the future, you can consider it when calculating the EMI and loan tenure.

Cost of the loan

The longer the loan tenure, the more interest you must pay. Before you settle on a loan repayment period, look out for the interest and the terms of the interest, such as whether it compounds. 

Calculating EMI based on loan tenure

When calculating the EMI, you will need the following components: 

  • The amount of money you wish to borrow
  • Interest rate
  • Loan tenure

Below is the formula you can use to calculate the EMI. 

E = P * r * (1 + r)n / (1 + r)n – 1

  • E stands for the EMI.
  • P is the amount you want to borrow.
  • R is the interest rate.
  • N is the loan duration. It is normally calculated in months.

Financial institutions may also charge other fees during the loan application process. Make sure you seek clarification on these other charges you may incur, such as: 

  • Loan processing fees, which range around 1% to 3% of the borrowed amount
  • Loan insurance fees

Best personal loans in Singapore

It can be confusing to compare the various personal loans available, but getting a grasp on loan tenures will help you significantly. In this section, we review some of the best personal loans in Singapore.

Standard Chartered CashOne Personal Loan

This loan has a low-interest rate and you get the cash deposited into your bank account extremely fast. Here are the main features of the CashOne loan product:

  • Interest rates start at 3.48% per year, with an effective interest rate (EIR) of 6.95% per year
  • Quick cash disbursement to your bank account
  • Enjoy a five-year annual fee waiver on your Platinum Visa credit card
  • You can apply for a minimum loan amount of S$1,000, and as much as 4X your monthly salary, capped at S$250,000
  • Waiver of S$50 annual fee for prompt payments of the EMI

Expected fees

  • S$199 processing fee in the first year 
  • Early repayment penalty of S$150 or 3% of outstanding principal, whichever is higher
  • Fee of S$50 for each change in tenure
  • S$100 late payment penalty

Eligibility criteria

You can apply for this loan if you meet the following requirements:

  • Between the ages of 21 and 65
  • Singapore citizens and permanent residents must earn at least S$20,000 per year
  • Foreigners must earn at least S$60,000 per year

HSBC Personal Loan

Here are the features of a HSBC Personal Loan: 

  • Interest rates start at 3.2% (EIR 6% per annum)
  • No processing fees are charged
  • Fast approval and disbursement
  • Receive between 90% and 95% of your approved credit limit
  • S $1,000 is the minimum loan amount
  • Slightly longer loan tenure of up to seven years

Expected fees

  • Overdue interest is subject to an additional 2.5% charge
  • Early repayment fee of 2.5% of the repayment amount
  • Late payment fee of S$75

Eligibility criteria

You can apply for the HSBC loan if you meet the following criteria: 

  • Between 21 and 65 years of age
  • Singapore citizens and permanent residents must have a minimum income of S$30,000 if salaried, or S$40,000 if self-employed or commission-based
  • Foreigners must earn at least S$40,000 per year and have an Employment Pass with a validity of at least six months 

Citi Quick Cash

Citi Quick Cash lives up to its name as you get the money instantly. Below are the main features of the Citi Quick Cash loan: 

  • Loan tenure of 12 to 60 months 
  • Interest rate of 3.45% (EIR 6.5% p.a.)
  • Quick application process

Expected fees

  • 3% cancellation fee of the outstanding principal amount or S$100, whichever is higher
  • If payment is overdue by two months, loan will be terminated with any outstanding loan amount charged 

Eligibility criteria 

  • Singapore citizen and permanent residents are to earn S$30,000 annually
  • Foreigners are to earn S$42,000 annually   

UOB Personal Loan

Get instant cash when you apply for a loan from UOB. The UOB Personal Loan has the following features: 

  • Interest of 3.4% per annum (EIR from 6.42% per annum)
  • Zero processing fees
  • Minimum loan amount of S$1,000

Expected fees

  • Cancellation fee of 3% of the outstanding loan amount or S$150, whichever is higher

Eligibility criteria 

  • Be a Singapore citizen or permanent resident
  • 21–65 years of age.
  • You must have an annual income of at least S$30,000


Understanding loan tenures will allow you to not only choose the loan option with the best terms for you, but also work out a repayment period that will fit your financial circumstances. Be sure to do your calculations so that you can be certain of whether the loan you’re taking up will be advantageous for you in the long run. 

A personal loan with an appropriate loan tenure can be a valuable asset in helping you pursue your goals. Compare the best personal loans and apply through SingSaver for exclusive offers and welcome gifts.  

Read these next: 
All The Legal Loan Limits You Need To Know About In Singapore
What Really Happens If You Skip Credit Card Bills, Loan & BNPL Payments
Four Types of Personal Loans: What You Need to Know
4 Times In Life You Should Consider Getting a Personal Loan
What’s The Difference Between Loan Sharks And Licensed Moneylenders?

At SingSaver, we make personal finance accessible with easy to understand personal finance reads, tools and money hacks that simplify all of life’s financial decisions for you.


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

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