A personal loan has numerous advantages and relieves stress when faced with financial issues. If you’ve already secured one but find yourself facing an emergency need for money such as a wedding or a wedding, there are two alternatives:
- A top-up loan
- New personal loans for borrowers.
An existing lender provides a top-up loan. However, a one-time personal loan is available from both new and existing lenders. If you’re already paying the EMIs to the personal loan, then you should opt for a solution that will reduce the obligation to pay the minimum.
Do you need to go to top-up a personal loan? Find out the answer and the information you need to be aware of about top-up loans.
What is a Top-up Loan?
The Top-up Loan can be a second amount of loan that can be repaid from an existing personal loan. You could receive an additional loan when regularly repaying a current personal loan. You may apply for a personal loan that is top-up at the same bank or with a different one by transferring your balance. The interest rate on top-up loans is usually around 0.25-1 percent higher than current loan rates.
Interest rates on top-up personal loans generally fall within the region of 9.85, between 2% and 23 to 23 percent. Personal loan top-ups can be obtained by renowned banks like Axis Bank, HDFC, SBI, and many more since they provide loans with lower rates of 6.9 percent.
When Should I Take a Top-Up Loan?
You may be able to borrow an additional loan to cover the cost of a top-up.
- You need urgent funds to pay the financial requirements of your business.
- You need funds immediately to expand your business for weddings, vacations, and more.
- You would prefer loans with long-term tenure and low-interest rates.
- You’ve got a personal loan for which you’ve already paid some EMIs.
- You’re looking for a loan that does not require any documents.
Things to Take into Account when making a call regarding top-up loans
When taking out any loan, you should make a sound decision considering your current financial circumstances and how your finances will develop. To assist you during the decision-making process, we’ve provided essential parameters that can assist in evaluating a loan to top up as well as a new personal loan.
- The rate The interest rates for top-up loans are the same as personal loans. You should benefit if you can find a lower rate than that available on the market. If you need help, you can bargain with the lender to bring rates down to your desired speed. If this doesn’t result in a satisfactory outcome, you may apply for a new personal loan to reduce the month-to-month EMI obligations. If you’re looking to maximize your benefits, your interest rate should be at a minimum of 2% and 4% lower than the current rate. This will lower the amount of EMI and the obligation to pay interest.
- Tenure Top-up loans can be used until the point at which the personal loan you have already taken out is still valid. Therefore, if you’re looking at the possibility of a top-up loan within two years after the beginning of your personal loan, which is for five years, your total loan (top-up and the personal loan you already have) will last for three years. This can increase the EMI obligation even more and could further change your financial routine.
In this case, for instance, if you have taken an individual loan of 5 lakhs, or Rs. 5 lakhs, at a rate of 12% with a loan term of 5 years, your remaining balance would be at. 3,34,862 at the close of two years. The EMI obligation is expected to be about Rs. 11,122. Suppose you apply now for a top-up loan amount of Rs. 1,00,000. The total amount of the loan will be 4,34,862. 4,34,862. Therefore, the current EMI will be increased to Rs. 14,444.
To fulfill the promise of an increase in EMI, your income is expected to increase from the point you initially sourced the loan. Also, make sure that the costs are within control. It is if you have not seen an increase in your income during the last two years. In that case,ensible to take out a new personal loan with reasonable rates and an additional loan period as an alternative to a different loan.
