Loan Planning

Short Tenure vs. Long Tenure: The Cost of "Low EMI"

Banks push for 30-year loans because they make more money. See the math before you sign.

By Editorial Team • Updated: Jan 2026 • Critical Analysis

1. The Comparison (₹50 Lakh Loan @ 8.5%)

Let's compare three tenure options for the same loan amount.

Tenure Monthly EMI Total Interest Paid
15 Years ₹49,237 ₹38.6 Lakhs
20 Years ₹43,391 ₹54.1 Lakhs
30 Years ₹38,446 ₹88.4 Lakhs

Analysis: By increasing tenure from 20 to 30 years, your EMI drops by only ₹5,000. But your Interest burden increases by a massive ₹34 Lakhs!

2. When to Choose a Longer Tenure?

Despite the cost, a 30-year tenure makes sense in one specific scenario: To Increase Eligibility.

Banks usually cap EMI at 50% of your take-home salary. If your salary is low, a shorter tenure leads to a higher EMI, which might get rejected. In this case, take the 30-year loan to get approved, but aim to prepay aggressively later.

3. The "Sweet Spot"

For most borrowers, the ideal tenure is 15 to 20 years.
This balances monthly affordability (EMI) with reasonable interest costs. Going below 15 years spikes the EMI too high, risking your monthly budget.