Life is not predictable. It mostly happens that once you avail of the loan, there is a necessity to avail the next one early. However, few understand the fact that there can be financial exigency that might propel you to borrow again. Mostly traditional mindset might usually look down on you when you take another loan. However, luckily, new-age lenders do not think so. Thus, pre-approved personal loan seekers can today access and avail of top up personal loans.
These are loans that allow customers to avail themselves of loans over and above their existing personal loan. Let us look through all that there is that you must know about top up personal loans.
Who can take out a top up personal loan?
Having a personal loan is beneficial if you are looking for a little more top up on the existing loan. Loan borrowers who already have availed the loan from a specific financial lender are completely free to avail of the personal loan top up option. A top up personal loan option is one of the best ways for these borrowers to easily overcome their financial concerns. As it is a personal loan, the lenders will provide you top up on loan to meet any of your financial purposes.
What must you have?
In the end, all loans carry some amount of risk for lenders. Therefore, they require being completely convinced. To be eligible for availing top up personal loan, the interested loan borrower must satisfy the lender. As a seeker of a loan, you will need to hold an acceptable repayment history. Also, the lender will run through some verification checks. Please do not fret if the lender for any reason asks you why you require taking up the top up personal loan.
Important acceptable reasons
Many have an idea what a top up personal loan is, but they might not completely know the distinct reasons for taking up this loan. One of the major reasons can be home renovation. The next crucial use can be personal, like settling a few old debts. Also, you can take a top up personal loan to buy a small plot of property, to shop for consumer goods. Businessmen can opt for the top up personal loan option to better take care of their business needs. Parents can avail this option to fund their child’s education or marriage. In many situations, these loans can also seek to pay medical expenditures.
Attractive rate of interest
Top up personal loan interest rate is usually slightly higher as compared to the existing loans. Given that the existing credit option is secured, this can mean a 1 to 2 percent more rate of interest for the top up personal loan opted by you. Owing to their instant disbursal and approval trend, borrowers must take advantage of the attractive interest rates provided by the bank.
Many have no idea that you can avail of tax benefits on top up personal loans too. Tax benefit can be availed on a top up personal loan if you use the loan proceeds to buy a home or renovate your home.
Avoid fretting about loan security.
A personal loan is an unsecured version of a loan. It means you do not require submitting any security or collateral to avail of the personal loan. The rule applies to all the top up personal loans also. By charging you slightly higher than secured credit options, financial lenders ensure to take care of the no collateral requirement issue. Thus, if you have no security or collateral, you are not required to fret.
Loan amount – flexible
Generally, a top up personal loan can be up to 80 percent over your original proceeds. This is a good process and must be sufficient for most of the requirements. Do note that you cannot take up an amount in a top up loan, which is more than your existing loan amount. Remember, processing charges are charged on the top up personal loan.
Sometimes, you require another helping hand to meet your dreams. How wonderful will it be if some understand your aspiration and are there to assist you? One such important product that can meet this criterion is a top up personal loan. Top up personal loan can render financial help offered by banks or HFCs to meet your dream with a slight financial aid.
Let us understand it through an example:
Suppose your financial institution has approved a personal loan of Rs 20 lakh for 5-year repayment tenure. After 3 years, the outstanding principal balance on loan is Rs 9.32 lakh. Now, if you are looking for any renovation in the home, you can consider taking a top up personal loan to fund the renovation.
Thus, a top up personal loan is given by the institution over the home. Just like you continue topping up your mobile balance in case you run out of balance, likewise, banks allow top up personal loans over your present balance. This may have enhanced your curiosity to study more about the product.
Listed below is a brief guide on all you must know about top up personal loan:
What is the meaning or definition of a top up personal loan?
Top up personal loan is a top-class facility provided by the HFCs, banks and other financial institutions that permit you to borrow specific proceeds over and above your personal loan amount.
Features of top up personal loan:
Eligibility: Top up personal loan is not available to all for having taken up the personal loan. Various parameters are considered before approving your top up personal loan. Lenders check your repayment capacity, past track record and your previous repayment track history. In case your credit report is favourable, banks grant top up personal loans by charging a few processing charges. In a few cases, banks also may waive off the processing charges.
Utilization: You can use the top up personal loan for the purpose of modification or home construction or to mitigate various personal expenditures like children’s education or marriage. However, remember that you cannot use the top up personal loan option for speculative purposes.