Life is unpredictable, which means that you must always be prepared to face unforeseen hurdles. When it comes to your finances, this is of utmost importance. Even when you avail a loan, there might be a necessity to opt for another one. Financial emergencies can be unforgiving, and you may have no other option but to choose a second loan right after the first one.
While the quintessential mindset might frown upon this, new-age financial lenders don’t. Instead, they now offer loans in addition to an existing one, known as a personal loan top up. If you’re unfamiliar with this concept and its numerous benefits, here is everything you need to know about it.
Essentials of top-up personal finance
As the name suggests, a personal loan top up is when you take an additional loan on your pre-existing one. Usually, you can be eligible for this if you’ve been diligently completing your EMI payments and agree to the lender’s terms. Most lenders offer the same interest rate as your previous personal loan, and the top-up entails minimal documentation, along with quick approvals.
Since it’s still a loan, the lender will always check for a good history of repayments, run verification checks, and may ask you the reason for availing one. However, that’s all the formalities you will have to go through for getting the top up, hence, keeping things much simpler and quicker.
The attractive benefits of top-up personal loans
Minimising the burden of loans
One of the primary reasons behind opting for this loan is how it consolidates your existing loans and minimises the loan’s overall interest rate. Hence, you can choose a top-up loan over your current personal finance to repay other debts, thus reducing the pressure of repaying several loans at once.
Attractive interest rates
Compared to a personal loan, a top-up one has slightly higher interest rates. Therefore, you can avail a 1% to 2% higher rate and manage your repayments more easily. Additionally, some lenders may also offer you to choose between a fixed or floating interest rate, thus providing maximum convenience.
When you take a top-up loan, it usually means that you already have a relationship with the lender or financial institution. Hence, they approve the loan quicker and disburse the amount faster too, as they’re aware of your credentials. Therefore, you can quickly access funds and fulfil your urgent requirements.
No pre-required factors
Most loans require you to provide a guarantor or collateral against the required amount. However, a top-up one doesn’t entail these prerequisites and hence, reduces the application process time drastically. Therefore, you can easily apply for the loan without worrying about losing your assets!
Top up loans for the win!
As you can already see, top-up personal finance is a win-win to overcome a financial crunch. With its longer repayment durations, there’s no reason why you shouldn’t avail one. Moreover, several lenders also provide a personal loan EMI calculator to help you determine the EMI amount and choose accordingly!