What Is Top Up Loan?
The top-up loan, as the name suggests, is the additional loan you take on your existing personal loan or a home loan. If you are in the process of repaying your loan and if you have been paying your EMIs (equated monthly installments) diligently, you can easily avail of a top-up loan by agreeing to the terms of the lender. Most lenders in India offer top-up loans at the same interest rate as your existing loan and it has simple documentation and quick approval process.
Features And Benefits Of Top-Up Loan
Reduce The Burden of Loan
One of the main reasons why many people in India opt for top-up loans is that it allows you to consolidate all your existing loans and thus help you minimize the overall interest rate on loans. You can avail of a top-up loan on your personal or home loan and pay off other debts, which in turn can reduce the burden of paying multiple loans at the same time.
Minimal Documents Required
Most banks in India have simple and minimal documentation for top-up loans. This is because the customers usually have an existing relationship with the bank and the banks are also aware of their credit history. If you are unsure how much top-up loan you can apply, you can use the top-up loan calculator to know exactly the amount you need and how much would be the EMI amount.
Since the banks have a relationship with the top-up loan applicants, the process of approval is quicker than a personal loan or a home loan. Also, the disbursement of the amount is faster as the bank is aware of the credentials of the applicant. Thus, a top-up loan is a great way to get access to funds immediately and meet emergency needs.
One of the most important things people look for while applying for any type of loan is the interest rate. Most lenders in India offer attractive top-up loan interest rates as compared to other unsecured loans. This is also one of the major reasons why several people opt for a top-up loan as it helps them manage their repayment easily. Some lenders in India allow the top-up loan applicants to choose between a floating or fixed interest rate.
No Collateral or Security Needed
Most lenders do not require the top-up loan applicants to provide any security or collateral against the amount they borrow. Neither do they require any guarantor. This not only makes it easy to avail the loan but also considerably reduces the time taken to process the application and disburse the funds. Thus, you don’t have to worry about losing any asset while applying for a loan.
Longer Repayment Duration
The banks usually decide the repayment duration for the top-up loan based on the outstanding balance and the loan amount you apply for. Usually, the duration is much longer than the personal loan, which is why people opt for this loan. However, you must know that the tenure of the top-up loan cannot be more than the tenure of your original loan. You can use the top-up loan EMI calculator to know exactly the amount you must repay every month until the end of the loan term.
Balance Transfer Facility
If you have availed a home loan or a personal loan from a certain lender and if that lender does not offer you a top-up loan, you can transfer the loan to another lender. This will not only help to get the additional loan but also help you meet the financial requirement.