Life is full of uncertainties. It’s not necessary that everything in your life goes as you planned. Consider this, sometimes people take a personal loan for fulfilling one of their specific requirements, and within some months they feel the need for another loan. Yes, this can happen with you as well.

Now the question arises that what we should do in such a situation? The answer is the top up loan. If you have taken a personal loan in the past and you are in urgent need of some more funds then, top up personal loan is the solution. Want to know more about it? Let’s gather some knowledge on it.

What is Top up Personal Loan?

 A top up personal loan is an additional loan on your current personal loan amount. If you have taken your previous personal loan from a reliable bank then, you can apply easily for this top-up loan. Otherwise, you can apply for the top up a personal loan in another bank by choosing the option of balance transfer of your existing personal loan. This new facility is very useful for any emergency so that people can take the help of banks even if they already have taken a personal loan.

Who can apply for Top-up Personal Loan?

 The people who have taken a personal loan from a specific lender are eligible to apply for the top up loan. You can easily get this second loan if you have an acceptable repayment history with the lender. By acceptable repayment history we mean, on-time payments of the existing loan installments and a good credit score.

Following people are eligible for top up personal loan:

• People who have taken a personal loan from the same bank and have repaid some of its portions in a timely manner.
• People who are Indian residents and fulfill the income criteria as specified by the bank.
• People between the age group of 18 to 65.
• People who have job stability and a good CIBIL score.

Acceptable Reasons for Top-up Personal Loan:

Lending money is a risky task on the part of the lender. Considering this fact, the lender bank will surely ask you about the reason for applying for the top-up loan. Since it is a top up on the personal loan; any personal financial need will be acceptable. Still, some people are unaware of this and usually hesitate in telling the genuine reason.

You could apply for the top up for any of the following reasons:

• Home Renovation.
• Marriage or education expenses.
• Medical emergency or treatment.
• Buying land, property or anything related to your business.
• Start a business.
• Paying off old debts.

Apart from it, you can also mention any other reason which shows that you need money for some important task.

Interest Rates on Top up Personal Loan:

 As you have already taken a personal loan which you have to repay yet so, the interest rates of this second loan can be a little bit higher. It usually goes up 1% – 2% as compared to your existing loan rates. However, you can avail attractive interest rates by searching for some good lenders. For instance, HDFC bank top-up loan offers interest rates ranging from 11.25% to 20% on the basis of your loan amount, tenure etc.

Documents Required:

You need to have the following documents for getting the top up loan:

• Self-attested application form along with photographs.
• Identity and residence proof.
• Documents of existing personal loan.
• Paid receipt of your previous loan installments (of previous 6 months).
• Income proof: salary slips and bank statements.

Characteristics of Top-up Loan:

Certain features of top-up loan make it better than taking any other loan. These are:

Simplified Documentation: Personal loan require more documentation than the top up loan. So, you have to submit some basic documents while applying for the top up loan. It makes the whole process of getting the loan much easier.

Faster Approval: As the banks have already known you as a borrower so, they won’t take much time for extensive research. It means the approval process of top-up loans is faster than normal loans. Your loan will be approved within a period of 2 to 7 days.

Easy Repayment Facility: You can select your own repayment tenure which makes it quite easy for you to repay the loan. The flexible repayment options make the top-up loan a much convenient option.

Lower EMIs: You can fix your EMIs as per your requirements. Lower EMIs won’t make the loan a burden as you can take out enough amount for monthly expenses even after paying them.

Attractive Loan Amount: You can avail high loan amounts through the top-up loan. HDFC bank top-up loan provides loan amounts up to 50 lakhs to the borrowers.

Points to Remember:

You should keep in mind a few things before taking the top up a personal loan. The important points are:

• You should only apply for the required amount as taking more amounts can be a burden in a situation where you have to pay the EMIs of the existing loan as well.
• You will have to pay the processing fee on the top up loan as well. In most of the cases, it is the same amount of fee which you have paid for your existing personal loan.
• You can’t apply for the top up personal loan after just 2-3 months of taking your existing loan. You will have to wait at least for 6 months before applying for it.
• You can avail tax benefits on the top up loan amount if you are using it for purchasing a property or house. Tax benefits also apply to home renovations. Apart from these two cases, you won’t get the tax benefits.

So, be vigilant and smart enough to apply for the top up personal loan rather than taking another loan from some new lender. Many people lose this chance just because of unawareness. Don’t be one of them.