Need a personal loan top-up? Consider your options carefully

Personal loans are a great way to access extra funds for various needs from buying a luxury item  to a home renovation. But many a time, despite preparing for these expenses, emergencies arise where you need to arrange for funds almost immediately and have to pay for the expenses upfront. They do catch you off-guard, don’t they? No worries, a personal loan top-up can come to your rescue in situations like these. 

What is a personal loan top-up?
 

So, what is a personal loan top-up? It’s an additional loan amount given by the bank to the borrower on top of the originally disbursed loan amount. If you have applied for a personal loan and later realise you need more funds, you can opt for a personal loan top-up to arrange for additional funds. A top-up is easy to apply for since the bank already has all your documents you submitted while applying for the existing personal loan. This makes opting for a top-up easier than applying for a new loan altogether where you would have to repeat the entire loan process all over again.

Personal Loan Top-up Features and Benefits

After understanding what a loan top-up is, it’s crucial to understand its features and benefits. First, it helps reduce the burden of handling multiple loans by consolidating your debt into a single manageable payment. The application process requires minimal documentation, and approvals are usually faster due to an existing relationship with the bank. Interest rates for top-ups may be competitive, making it a cost-effective option. Additionally, no collateral is needed, providing an easy way to access extra funds.

Who is eligible?
 

The only criterion to consider here is that you must have already taken a loan. In which case, you are free to apply for a personal top-up loan from your lender. The good news is that the funds are free to be used at your absolute discretion, just like a personal loan. If you are aware now, go and get an instant personal loan. Both salaried and self-employed individuals can apply.

Eligibility Criteria and Documentation for a Personal Loan Top-Up

To qualify for a personal loan top-up, lenders assess factors like your income, credit score and repayment history. Required documents include identity proof (Aadhar or PAN card), address proof, and income statements. Sometimes, bank statements or salary slips are also needed.

How can I get the loan?
 

A personal loan is given on the guarantee of the individual and of their repayment history. This is doubly so for a top-up loan. You must have a very good (read perfect) repayment history and be prepared for the lender to run a few verification checks. Also, expect to answer questions as to why you need a top-up. 

Why all these questions?
 

It all boils down to this. The lender will ask you why you wish to avail a top-up loan, and you must give a convincing answer. Not to say your reasons are not genuine, but it pays to have a ready explanation why you require it so urgently. It could be anything from meeting an unexpected expense or a new need that arises in your life. Either way, the important thing is that you should be honest with your reasons and answer accordingly. Lenders have a nose for sniffing out the truth. 

What to expect after you have availed a personal top-up loan?
 

This is as important as availing the loan itself. Here's what you can expect:

• It can cost you more: A personal top-up loan will cost you more by way of interest than your prior loan (they will be calculated separately). Expect to pay 1%-2% extra.
• The loan amount: You can take a personal top-up loan up to 70%-80% of the initial loan amount. 
• Tax benefits: Yes, that's right. But this holds good only as long as you use the top-up loan to buy a house or to undertake home renovations; still a good deal all in all. 

FIRSTmoney: A better alternative to a personal loan top-up
 

There might be chances that you opt for a personal loan top-up due to misjudged expense planning or any emergency that arises. Instead of answering all sorts of questions by lenders, apply for a smarter personal loan like FIRSTmoney from IDFC FIRST Bank. Here’s why:

1.  Zero foreclosure charges:With zero foreclosure charges, this loan is one of the most customer-friendly personal loan options which allows you to repay your loan whenever you have the funds.

2.  Easy on demand loan:Get immense flexibility to opt for additional loan with just a few click to meet your extra monetary requirements.

3. Easy digital application process:Thanks to FIRSTmoney, you can skip the lengthy processes of having to apply for a personal loan and then for a top-up. You can simply apply for a FIRSTmoney loan, with just your PAN card and a few details, and obtain multiple loans without starting the process from scratch. This makes applying for a FIRSTmoney loan much more efficient compared to any instant personal loan or a top-up loan.

4. Instant approval: No more waiting. You can get instant approvals of amounts up to ₹10 lakhs depending on your creditworthiness through a completely digital application. To apply for a FIRSTmoney loan, all you need is a stable income, a physical PAN card during VKYC, and a credit score of 730 and above..

Conclusion

A personal loan top-up can be a helpful tool to maximize your loan, but it's essential to evaluate your situation carefully and use it wisely. Additionally, opting for a Personal Loan Balance Transfer with FIRSTmoney could offer more convenience and greater benefits if you're considering a loan top-up. With advantages such a zero foreclosure charges, and competitive interest rates , it offers considerable advantages over a top-up loan.