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A number of banks and financial institutions offer top up options on existing personal loans. Some of the banks and/or financial institutions that offer top up loans on personal loans in India are listed below:
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Metro and urban – 1 lakh
Semi-urban and rural – 50,000
Metro and urban – 10 lakh
Semi-urban and rural – 5 lakh
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Benefits
Example:
Let us start with an example here. Say, you drive a car and on a monthly basis you fill up the car with fuel worth Rs.2,000. However, on a particular month, you had to use the car more than what you usually do. So, on the 20th of that month, you see the ‘low fuel’ indicator blinking on your dashboard. What do you do? You obviously go to the nearest petrol station and get your car filled up for another Rs.1,000 (say). That is exactly how top up personal loans work.
Top up loans are one of the credit options that can be used by an individual in case of emergencies where he or she falls short of cash. Top up loans are credits that are taken in the form of an addition to an already existing personal loan. Most financial institutions offer top up loans for personal loans and home loans. If you have an existing personal loan which is still active, and you realise that you would need more fund, you can apply for a top up loan. A top up loan is also sanctioned faster than a usual personal loan as the paperwork is already done with the financial institution at the time of applying for the original personal loan.
| Point of comparison | Personal Loans | Top up Loans |
|---|---|---|
| Interest rates | The interest rates are generally high. | When compared to personal loans, the interest rates are usually lower. |
| Ease of getting a loan | As personal loans are unsecured loans, the risk factor is higher. This leads to the banks (and/or lenders) to set up strict criteria for the approval of loans. | A top up loan based on a personal loan is usually easier to get as the borrower has already passed the requirement of the lender at the time of disbursal of the original loan. However, in case of approval of a top up loan, the credit history of the borrower (repayment history, timely payments, and so on) is taken into consideration. |
| Collateral or Security | A personal loan is an unsecured loan. No collateral or security is required against a personal loan. | A top up loan, being based on a personal loan, also does not require security or collateral against the loan amount. |
| Purpose of the Loan | A personal loan has no fixed purpose of usage. It can be used by the borrower for any purpose. | A borrower can apply for a top up on a personal loan if he falls short of cash. There are no restrictions in terms of usage of the money. |
The eligibility criteria for top up loans vary from bank to bank. However, there are certain generic conditions which are taken under consideration. These factors can be summed up as follows:
The documentation process for top up personal loans is quite nominal as the paperwork and documentation are already done and validated for the existing loan. The usual documents which are required for the application of a personal loan are as follows:
Most lenders offer the facility of changing the date of payment of instalment for your loan. However, your bank might charge certain PDC swap charges and rescheduling charges for the request.
When an individual applies for a personal loan, a number of factors are taken into consideration such as the credit score, the repayment history, defaults (if any), total income, other active loans, and so on. The final amount of loan is decided on the basis of these factors.
No, a personal loan is an unsecured loan. This means that you will not be required to provide any collateral or security against the loan that you take.
Personal loans are unsecured loans. Thus, the risk factor is higher in the case of these loans. The interest rates are higher because of that.
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.
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