Life is unpredictable. It often happens that after you take a loan, there is a necessity to take another one pretty soon. However, very few understand the fact that there can be a financial emergency which may force you to borrow again. Traditional mindset may look down upon you when you look for a second loan. However, fortunately, new-age banks do not seem to think so. This is why borrowers today can access and get a personal loan top up. These are loans that enable customers to take out a loan in addition to their existing loan. Let us take you through all that is there to know about a top up personal loan.
Having a Personal loan can be an advantage when you are looking for a second. Borrowers who have already taken out a loan from a particular financial lender are free to apply for a personal loan top up. A top up personal loan is a great way for such borrowers to overcome their financial concerns. Since it is a personal loan, lenders will not really be too much bothered about the purpose of taking out the loan.
At the end of the day, any loan carries some risk for the lender. That is why they want to be absolutely convinced. To be eligible for a personal loan top up, the interested borrower has to satisfy the lender about the same. As an applicant, you will be required to have an acceptable repayment history. The lender will also run some verification checks. Do not worry if the lender asks you why you want to take a top up personal loan.
Many know what personal loan top up is, but they may not fully know the different reasons for availing such a loan. One of the biggest reasons is home renovation. Another use could be personal in nature, such as settling some old debt. You can also take a personal loan top up to purchase a plot of land, to buy another property, or even shop for consumer durable products. Businessmen can take a top up personal loan to take care of any business requirement. Parents can take such a personal loan for children’s education/marriage. In many cases, such loans are also sought to pay off medical expenses.
The interest rates for a top up personal loan are generally slightly higher than the existing loan. Given that the existing loan is secured in nature, this could mean 1-2% more interest rate for the personal loan top up opted by you. Given the quick approval and disbursal trends, borrowers should take advantage of the attractive rates offered by banks.
Many do not know that a top up personal loan can lead to a tax benefit. Yes. This can be availed on top up loans provided the amount sanctioned by the lender is utilized for the purchase of a house (principal and interest). What's more? You can also avail tax sops if the funds are used to renovate your home.
Personal loans are unsecured in nature. This means you do not need to submit any collateral to take a personal loan. This rule applies for top up loans too. By charging you slightly more than secured loans, the financial lender takes care of the problem of collateral. If you do not have any security, do not worry.
Usually, a top up personal loan can be 70-80% of the original. That is quite a good sum and should be adequate for most needs. Do remember that you cannot borrow an amount in the top up loan which is more than the existing loan. There will be processing fees for giving top up personal loans.