Top Up Personal Loans: Why to choose top Up Loan for Existing Borrowers
If you are an existing loan borrower, going for a top-up personal loan would be a wise move. A personal loan top-up is not only the best medium to get additional funds but with its various other features and benefits, it makes an ideal option to fulfill any financial need. To get a personal loan top up, a borrower should be an existing loan customer of the bank. Additional funds will be given to the borrower over his existing personal loan limit. Low-interest rates and nominal processing charges make personal loan top up a preferred choice for existing borrowers. Since the customer is already having an existing relationship with the bank, the documentation should also be minimal. However, factors like cibil score, repayment capacity, category of the employer, income and job stability are also considered by the lenders before approving the loan.
What is Top Up Loan?
A top up loan is an additional loan amount that you can avail on your existing personal loan. You are eligible to apply for a top up loan only when existing personal loan payments have paid regularly. However, the credit limit of your top up loan is based on many eligibility factors like monthly income, cibil score, credit history, category of the employer, income & job stability, etc.
Top Up Loan v/s New Personal Loan: Which One is Better
People always have this confusion as to which one is a better option. Well, top up loan in many ways is a far better option than a fresh personal loan. Yes, when you go for a top-up loan, you are actually getting an additional amount on top of your existing personal loan. Thus, which means you have only one loan to repay and there is no more hassle of maintaining the other one. While on the other hand, in the case of a new/fresh personal loan, an additional burden will be added on your shoulder as now you have to repay two loans simultaneously. Hence, a higher possibility of default will be there. So, it would be advisable to go for a personal loan top up if you are an existing borrower.
Why Personal Loan Top Up is Best for Existing Borrowers
Consolidate Debt: All your existing loans and debts can be consolidated into a top up loan. Consolidating your debt into one is surely the best way to improve your cibil score. Not only maintaining multiple loans is a big hassle but chances of loan default are also higher. So, debt consolidation is surely the best thing
Extension to the Primary Loan: If the credit limit of your existing personal loan is not sufficient, going for a top up loan is surely a wise move. It will give an extension to your primary loan, catering your financial needs in the best way.
Best in Fulfilling Other Financial Needs: With top up loan all your financial needs can easily be catered as this credit facility comes with a lot of perks. Now you have additional funds available hence no worries about fulfilling your other financial needs.
Quick and Speedy Disbursal: Being an existing customer of the bank, you can expect to have quick approval and speedy disbursal of your personal loan top up. The sooner the funds will reach your bank accounts, the better it is.
Flexible Repayment Tenures: You don’t need to feel any burden as a personal loan top up comes with flexible repayment tenures. The longer the tenures, the better it is for you as your loan journey would be smooth.
Tax Benefits: If you avail a personal loan top up for home extension or home renovation purpose, you are eligible to get tax benefits. Yes, under section 24 of the Income Tax Act, a loan availed for home renovation or extension is liable for a tax exemption.
No Security/Collateral: A personal loan top up comes quite easily to you as you don’t need to give any sort of security to the lender. Yes, your top up loan application will be processed quickly hence you can get the required funds instantly in your bank account.
How to Apply for Personal Loan Top Up?
The procedure of personal loan top-up can be done online at your existing lender. You should be an existing borrower and your loan should be active for a personal loan top up. However, if your existing lender does not offer a top-up loan, you can opt for personal loan balance transfer and transfer your existing personal loan to a new lender. Soon after transferring your loan, applying for a personal loan top up offered by your new lender.
Personal Loan Top Up Eligibility
Usually the eligibility criteria varies from bank to bank and there are certain eligibility conditions which are summed up below:
Cibil Score: Before approving personal loan top up, lenders do check the cibil score of the borrowers. An individual must have a good cibil score of 750 or above out of 900 in order to enjoy a hassle-free personal loan journey. After all, a good score is an indication of a good repayment record and helps in building a good image of an individual in front of lenders. Thus, it is always advisable to maintain a good score so that it would be easy to grab the best personal loan deal.
Repayment Record: A borrower’s repayment record is also taken into consideration before giving personal loan approval. Talking about a repayment record, it shows a detailed financial history of an individual such as loan details, interest rates, defaults (if any), credit and debit card transactions, etc. So, ensure that your repayment track is safe and clear so that your profile looks worthy enough to give away the loan.
Active Loan Account: To opt for a personal loan top up online, it is important that you have an active personal loan account.Yes, an individual should be an existing borrower and having an active personal loan account. So that based on that account, it would be easy for a borrower to avail top up personal loan.
Documents Required for Personal Loan Top Up
- Proof of Identity such as passport, Aadhaar card, Election Commission card, PAN card, and/or driving license
- Salary slips for 3 months (in case of salaried applicants)
- Proof of Residential address such as rental agreement, passport, utility bills, etc.
- Income details in bank statement for 3 months
- Passport-size photographs
When to Go for Personal Loan Top Up?
A top-up loan should be taken only when you need funds for the long term. Since the loan is against your existing personal loan, defaulting on repayment can damage your cibil score. So ensure you can afford to repay an additional loan over your personal loan.
Frequently Asked Questions (FAQs)
Q. Can I change the date on which I pay my personal loan top up installment ?
A.Well, most of the lenders offer the facility of changing the EMI date of your loan. So, it would be advisable to check the same with your lender first. And, your bank might charge certain PDC swap charges and rescheduling charges for the request.
Q.How the bank will decide the eligibility of my personal loan?
A.There are various factors that banks will take into consideration before deciding the loan amount. Yes, factors like credit score, the repayment history, defaults (if any), total income, other active loans, and so on is taken into account by the lender before deciding the final loan amount.
Q. Is personal loan top up a collateral-free loan?
A. Yes, be it a personal loan or personal loan top up, both are collateral-free loans. Well, which simply means a borrower doesn’t need to give security to the lender to avail any of these loans.
Q. Can I apply for Personal loan top up online?
A. Yes, a personal loan top up can easily be applied online. Many lenders provide the provision of applying for a loan online.
Q. Can I foreclose my top-up loan?
A. Yes, usually most banks and financial institutions allow the borrowers to foreclose their loans. However, it is recommended to check with your lender if you can avail the facility or not and what are the related charges.