You might have opted for a personal loan to fund your urgent personal needs or to consolidate your credit card bills. However, while repaying the loan, you might face another financial drawback – it could be in the form of a medical emergency or some other pressing financial need. In such a scenario, you can approach your lender and request a top-up on your existing personal loan. This will give you access to additional financial help (usually at the same or lowered interest rate). If your lender denies your request, you could refinance your current personal loan with another lender to avail the top-up amount.
There are a plethora of banks and NBFCs (non-banking financial companies) that offer personal loan top up. However, you need to be an existing customer with the bank in order to obtain a top up loan through them. The repayment of a personal loan top up is done in the form of EMIs (equated monthly installments); thus, you can easily repay your loan amount over a period of time. However, the eligibility criteria for availing a top up loan is similar to that of obtaining a personal loan- the financial institutions check your age, repayment capability, profile, etc.
Why you should opt for a loan top up?
A personal loan top up will come handy in a number of ways, such as:
Improve credit score: You might not believe this; however, opting for a personal loan top up will improve your credit score and thus, help you obtain financial assistance in the future easily. The reason being; by opting for a loan top up, you don’t have to apply for another loan. Therefore, repaying a single loan over two or more loans will improve your credit score.
Other uses: You can make use of the top up loan amount to renovate your house or to cover your wedding expenses. After all, there are times when you might still fall short of cash, even after applying for a personal loan. Thus, at such times, it is better to opt for a top up rather than borrowing a second loan through the financial institutions.
The various features of applying for a top up loan through a bank or an NBFC (non-banking financial company) are here as follows:
No collateral: As discussed earlier, you can only apply for a personal loan top up, if you have an existing personal loan account with the bank. Therefore, you must have already submitted the loan documents with the financial institution; hence, you don’t have to provide any other collateral for obtaining a top up loan. And you will receive the original copy of your documents, only after you repay the entire borrowed sum. You can choose to repay the loan amount within the repayment tenure or opt for a longer one.
A single loan: The best thing about opting for a loan top up is the fact that you don’t have to exhaust yourself by repaying multiple loans; you can simply club it all into a single loan.
Processing time: The top up loan application will be quickly sanctioned; as you already have an existing loan account with the bank. This will help you to obtain the required capital sum without any delays.
Interest rates: These loans are provided to the customer at much more attractive interest rates than those given out for personal loans.