What is the Best - Long, Medium or Short Term EMI?

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A major thing to watch out for when getting a car loan is the EMI. Also known as the Equated Monthly Installments, it’s the agreed-upon amount to be paid monthly by you, the borrower to a car loan service, the lenders, and it’s paid monthly. Unlike variable payment schemes, it is fixed and will remain so even if you want to increase or reduce payment.

Generally, most car loans are paid in the form of EMI. This really helps when you’re considering whether to go for a short term or long term loan.

As expected, loans with long term EMIs come with low-interest rates while those that are medium term are not as considered as much as long term and short term. Paying close attention to your options is a good idea, and will give you an upper hand in negotiation.

The length of the monthly installment term determines how you go about your car loan. This article tackles the things to consider while choosing to go with a short, medium or long term EMI.

Here Are A Couple Of Them:

How much you earn

Your income plays a big role in determining how you structure your payment process for your car loan. If you earn a lot and you’re not in any debt, then you can go for a short term loan as you’ll be capable of handling the high EMI that would be coming with it.

However, you have to make sure your income is large enough to handle your necessities while you pay up the loan.

That way your future is secured regardless of challenges that may occur.

Interest Rate

When added up across the months, the interest rate is the credit you pay on top of the loan you requested for. The cost of credit paid on the loan increase with every increase in the rate of interest. What you need to do is budget your expenses based on you EMI. This is because you’ll continue to pay the credit till the loan expires. It is possible to go for a short term loan and end save up on EMI, but make sure it is agreed to be fixed amount.

Even if you have a bad credit score, you have to avoid being distracted by car loans with high interests. Don’t feel bad about saying no to car loans with high interest rates which a lot of times are long term.

If you are in Canada, we have good news for you: You can now avoid bad credit car loans in Canada.


Make sure to go over your lender’s policy as regards loans and their payments. Most times, you’ll be offered this information before any transaction. However, it is important that you understand their policy regarding short term, long term and medium term loans before making any decision.

This is to prepare yourself for any challenge that may affect the interest rate, especially with long term loans.

How to Decide

EMI is made up of principal and interest. The main difference between long term, short term and medium term ones is the length of the period. Although short term EMI generally comes with relatively higher interests, they are the most recommended option of the three. Loans with long term EMI usually extend beyond five years, while those ranging between three to five years are considered medium term.

You can definitely make a choice based on your budget, income, the policy of the car loan service, and the interest rate involved.

Many car loans are flexible with the period of payment. Just remember that it’s a fixed kind of payment so you have to be completely able to handle it.