Top Up Personal Loan

What is a Top Up Personal Loan?

A personal loan has become a go-to for millions of Indians to finance their diverse cash needs. However, there can be instances where you may run out of these funds too. In such situations, a top-up personal loan can provide the additional financial support you need. It is a facility provided by banks and NBFCs where you can get an additional loan on your existing loan. This eliminates the need to go through the entire loan application and approval process all over again.

Considering a top-up personal loan? Here’s all you need to know about it.

Reasons Why You Should Apply for a Top Up Personal Loan

The reason behind applying for a top-up personal loan is beyond the fact that it’s easy to apply. While there are different types of loans available in the market to meet the diverse needs of people, it can get a little difficult to manage multiple credits. Usually, there’s no restriction on the end usage of a top-up personal loan. This way, you can get instant access to the cash you need without applying for too many loans. And because you’re taking a loan from an existing lender, you need not apply again and get instant access to the cash you need.

Features and Benefits of Top Up Personal Loans

Before you take a top-up personal loan, it’s important to understand exactly what it is and what are its features. Here’s how it works; consider you have taken a personal loan from a lender and are currently paying your EMIs for that loan. You suddenly need an extra source of cash. If your lender has a top-up personal loan facility, you can get an additional loan while repaying your ongoing loan.

Here’s how you can benefit from top-up personal loans:

Unsecured Loan:

Top-up personal loans are unsecured loans. This means that you don’t have to provide any security like gold, jewellery, shares, etc. to get access to the money you need.

Instant Approval

Longer Repayment Tenure:

With a top-up facility, your repayment tenure increases, giving you more time to repay your total outstanding loan.

Flexible repayment options

Lower Interest Charge:

A top-up facility means you’ve already established a relationship with your lender. If you’re a low-risk borrower and have paid all your EMIs on time, the lender may consider giving you a personal loan with a lower interest rate.

Competitive interest rate

No Restriction on End Use:

One of the best parts about taking a top-up personal loan is that there is no restriction on the end usage of it. You can use it anywhere you like without any restrictions.

No documentation or paperwork

Increase Credit Score:

If you keep repaying your EMIs on time, it will automatically increase your credit score. A high credit score makes you a low-risk borrower which can help you unlock high-value loans at lower interest rates. 

Collateral free loans

Eligibility Criteria for Top Up Personal Loan

While you can avail a top-up personal loan from your existing lender, you still have to meet a certain eligibility criterion to unlock that facility. Here’s the eligibility criteria you need to fulfil:

  • You should have an existing relationship with a lender.
  • Ensure you make all your EMI payments on time and have a clean repayment history with the lender.
  • A good credit score, clean repayment history and strong credit profile increase your chances of unlocking a higher loan amount.

Please note that the eligibility criteria for a top-up personal loan can be different for different lenders.

Documents Required for Top Up Personal Loan

However, you can keep these documents and personal information handy to further expedite your loan application process. Know more about: documents needed for Personal Loan.
 

Mandatory documents

Proof of Photo Identity

You will need to complete a real-time selfie verification to complete a KYC on Zype after you’re approved for a personal loan.

Proof of photo identity

Mandatory Documents

You will need to enter your PAN & Aadhaar number along with a few basic details to get a loan offer & to complete your KYC to activate your credit line. (Physical documents not required)
Proof of Income

Proof of Income (Optional)

You can also apply for a higher credit limit by uploading your bank statement for the last 4 months.

Difference Between Personal loans and top up personal loans

Reason for difference Personal Loan Top-up Personal Loan
Relationship with the lender
You can apply for a personal loan from any bank or NBFC.
You can get a top-up personal loan from your existing lender if they offer that facility.
Repayment Tenure
Depending on your lender and type of personal loan, your repayment tenure can range from 3 months to even 10 years.
Usually, your repayment tenure of a top-up personal loan is similar to your current loan.
Approved Loan Limit
The personal loan amount you’re approved for depends on many factors like your credit profile, income and even the limit of the lender.
Based on your lender’s terms of borrowing, your top-up personal loan amount depends on the current loan limit.

Frequently Asked Questions

What Does a Top-Up Loan Mean?

A top-up loan is when you borrow money on top of an existing personal loan. You can avail a top loan without any lengthy documentation or paperwork as you already have an established relationship with the lender.

What is the Maximum Top-Up Loan Amount that I Can Avail?

The maximum top-up loan amount that you can avail depends on your current approved loan amount with the lender.

Can You Get a Personal Loan on Top of Another Loan?

Yes, taking a personal loan on top of another loan is known as a top-up personal loan. You will have to ensure that your existing lender provides a top-up facility.

What is the Rule For Top-Up Personal Loans?

One of the most important rules for taking a top-up personal loan is that you make all your EMI payments on time and have a clean repayment history with your existing lender.

What Are the Disadvantages of Top-Up Personal Loans?

A disadvantage of taking a top-up personal loan is that you can avail this facility if you have an existing relationship with a lender who offers this facility.

How is Interest Calculated on Top-Up Personal Loans?

The interest rate you’re charged on a top-up personal loan is the same as your existing personal loan.

Does a Top Up Personal Loan Affect Your Credit Score?

Yes, it does. If you take a top up personal loan but don’t pay your EMIs on time, it may lead to a negative impact on the credit profile.

Are Tax Benefits Available on Top-Up Personal Loan?

Top-up personal loans do not have any tax benefits.

What Are the Main Differences Between Personal Loans And Top-Up Personal Loans?

One of the biggest criteria that sets personal loans and top-up personal loans apart is the source of borrowing. You can apply for a personal loan from any bank or NBFC, however, you can take a top-up personal loan only from an existing lender.