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Personal Loan Top Up

Life is unpredictable and with regard to finances, you can never be sure of how much money would be enough for you. You may have already availed a personal loan for your various expenses; however sometimes you may still end up short of your requirement which can be very frustrating. What happens when there is a need for more money? That is when going for a top up loan makes sense. You can avail a personal loan top up from the same bank which you applied for the personal loan.

Banks have a wide range of tailor-made personal loan top ups that they can offer – for your very specific needs. A top up personal loan is given to support individuals, so they won’t have to worry about borrowing another loan altogether. They just have to pay the loan back in equated monthly installments for the specified tenure and it is done.

The tenure can be the same as your existing loan too, or you could get a longer repayment tenure. There is often the need for extra cash when building a house, simply because material rates are in flux constantly and even the Interior costs could go up. So, if you’re ever stuck in a situation wherein you need some extra cash quickly, a personal top-up loan is a great choice.

Why Personal Loan Top Up?

The need for a top up personal loan can arise due to many reasons, some of which are as follows:

  • Personal expenses
  • Purchase of Home Appliances
  • Education or wedding expenses
  • Medical expenses
  • Renovation of property

Personal Loan Criteria for Top Up

It is important to remember that this facility is only available to existing bank customers who have already availed a loan. The eligibility criteria for a top-up loan are pretty similar, with some very minor changes – the applicants need to possess a good repayment record. Also, the lender verifies your need for taking a top-up loan by running some important verification steps and then considers your application. The tenure of repayment also depends on the age of the customer on maturity of the loan, the customer profile, repayment scheme chosen, the age of the property at loan maturity and other such factors.

Personal Loan Top Up Benefits

There are many advantages to taking a top up personal loan-

  • There is no need for collateral this is because this loan is sanctioned only after you have availed a personal loan from your bank. Customer documents have already been submitted to the bank. So, even if you close your initial personal loan, you will have to close your top-up loan before requesting for the original papers from the lender.
  • Tax benefits associated with a Personal top-up loan – if the top-up loan availed is used to renovate your house or purchase a new one (Section 24) you would be eligible for Tax Benefits. This clause is not applicable in any other situation.
  • Top-up Loan Amount can be same as Original Loan Amount – You may need the money for any number of reasons. But the maximum amount that can be availed must be equivalent or lower than your original loan amount.
  • The approval process is much quicker as verification has already been done.
  • There is the added benefit of getting a secured loan without having to mortgage a new asset.

Personal Loan Top Up Interest Rates

Some banks that offer top-up loans are – HDFC Bank, Axis Bank, Kotak Mahindra, ICICI Bank, SBI (State Bank of India), etc. An upfront fee is needed to process the application. There are pre-payment and foreclosure fees that you need to be aware of which vary from one bank to another.

Top up loans are cheaper too – and the interest rates are somewhere between 9.5% -12% p.a. – again depending on the bank you approach.

Repayment and Tenure of Top Up Loan

Opting for a top up loan is better than considering taking a personal loan as interest rates are very high. Personal loans are unsecured and hence do not require a collateral. There are no tax deductions either. But, the documentation and approval process can take long and this is tedious.

The maximum loan tenure is around 5 years offered by most banks, though some like Tata Capital offer up to 6 years. Other banks like Fullerton India, Bank of Baroda, etc., have a tenure of only 4 years, and this again depends on the loan amount applied for. A longer tenure translates to lower EMI payments.

Now that you have a basic idea of what a personal top-up loan is, choose the option that best works for you. If you don’t have assets for collateral or don’t have a home loan, then you could opt for a personal loan top-up. Whatever you do, please make sure to do some thorough research so you can choose the particular lender who offers you the best deal.