tenor
Also called: jangka waktu pinjaman
The length of time a loan must be repaid according to the agreement.
What it means
Tenor is the loan period, meaning the agreed length of time to repay the debt. Tenor is usually stated in months or years. The longer the tenor, the smaller the monthly installment, but the total interest paid is usually larger.
Why it matters for families
The choice of tenor affects a family's monthly cash flow and the total cost of the loan. A tenor that is too long can make families pay more interest, while a tenor that is too short can make installments burdensome. This decision should be adjusted to income and routine expenses.
Example
For example, a family borrows Rp240 million with a fixed interest rate of 10 percent per year. A five-year tenor gives a larger installment, while a ten-year tenor gives a smaller installment but higher total interest. The family needs to weigh both.
Common misunderstanding
It is often assumed that a long tenor is always beneficial because installments are lighter. In fact, the total interest paid can be much larger, so it needs to be calculated thoroughly.