About Personal Loan Top Up
A 'Top Up Loan' adds an extra amount to an existing loan account. As the term denotes, a “Top Up Loan” is a sum given to an applicant as an addition to the current loan account. Banks have devised this scheme to retain customers making an on-time repayment for credit taken.
Applicants requiring immediate funds find it convenient to secure a
Top Up from Banks with which there is a relationship. Lenders are assured of repayments and look to attract good customers by offering lowered interest rates and extra charges per eligibility.
Representative Example of a Top-Up Personal Loan
| Loan amount |
₹2 Lakhs |
| Tenure |
36 Months |
| No of EMI’S paid |
6 |
| Current EMI |
₹6,835.53 |
| Rate Of Interest |
14% |
| Top Up Amount Approved |
₹1 Lakhs |
Calculations Post Personal Loan Top Up
| Top Amount Approved |
₹ 1 lakhs |
| Principal Balance of The Existing Loan |
₹ 1,72,186.60 |
| Total Loan Amount Post The Top Up |
₹ 2,72,186.60 |
| Rate Of Interest |
12.5% |
| Tenure of Fresh Loan |
36 months |
| EMI For The Fresh Loan Post Top Up |
₹ 9105.63 |
Criteria For a Personal Loan Top Up
The essential eligibility criteria remain the same though individual Banks may differ in their policy.
Financial Eligibility
The applicant must have the resources to afford the extra loan amount applied for. Financial obligations, which include credit card obligations and EMI for other loans, will be taken into account the current income, which consists of the monthly salary, and other sources, should be sufficient to cover the total EMI being paid monthly and the mandatory expenses.
CIBIL Score
The CIBIL Score of the applicant must be above the required benchmark and the credit history must not reflect delayed payments or settlements for eligibility for Top Up loan. The existing loan track must show a timely repayment record. The viewing must not reveal too many inquiries for credit as it can portray the applicant’s intention to acquire too much credit simultaneously.
Vintage of Existing Loan
An applicant may Apply For a Top Up to the existing loan after 3 to 6 months. Financers would like to assess the customer and verify that the credit taken is being repaid timely before further exposure.
This would apply more precisely to first-time loan seekers without a CIBIL Score. Banks can make exceptions for high-income applicants with minimal credit exposure, for the Top Up loan eligibility, but the policy remains.
Profile of The Applicant
Suppose the loan seeker has changed employment since the Top Up norms will be applied per the current profile. The terms for the Top Up loan requirements will depend on the category of the present employer in the company list, the employment profile of the applicant, and the net salary.
If a break in employment for too long, a valid reason has to be given, or the loan may be denied.
Benefits of a Top-Up Loan
Advantages of an Existing Relationship
Individuals with an existing relationship with the Bank such as a salary account
Personal Loan, or any other credit line have an edge as the financer is familiar with the customer's details. Knowing the credit behavior of the customer inspires confidence to lend further. Thus, the request for a Top-up can be easily granted.
Quick Processing
Individuals with an existing relationship with the Bank such as a salary account Personal Loan or any other credit line have an edge as the financer is familiar with the customer's details. Knowing the credit behavior of the customer inspires confidence to lend further. Thus, the request for a Top-up can be easily granted.
For Better Terms and Conditions
An existing Personal Loan customer with a sound repayment track will always be preferred. The Bank will like to offer the best terms and conditions to fund and retain the customer at all costs.
Applying For a Personal Loan Top Up will give the applicant leverage to get a lower Interest rate with the most reasonable terms.
Pay a Single EMI
With additional funds received as a Top Up, the existing Personal Loan will be reworked; the existing Personal Loan will be closed, and a new loan account will be generated with the balance of the previous loan and the fresh funds received.
The applicant will also get a chance to choose a comfortable repayment tenure. Calculate the EMI with the help of the Top Up Loan EMI calculator. If the EMI is affordable, the applicant can repay the loan in a shorter tenure and save on interest tight on funds the repayment tenure can be extended to 72 months with a lower EMI.
Balance Transfer with Top Up
An applicant opting for a
Personal Loan Balance Transfer to an alternate bank can secure extra amounts as a Top Up. The
Balance Transfer will help reduce the EMI, and the applicant can simultaneously apply for a Top Up if additional funds are required. Thus, specific enhanced loan amounts are secured with an affordable EMI.
Eligibility Calculation for a Top Up Loan
The current salary drawn regularly will be the basis for the calculation EMI for other loans will be considered.
The eligibility calculation will be applied per the financer's norms and the customer's profile, which include.
The Salary Bracket
The multiplier will be applied per the salary norms the higher the income, the greater the multiplier. An applicant with a lower income will be eligible for a lower amount as per the salary proportion.
The Company Category
A customer working with a cat A company will be allowed to pay a more significant percentage of the salary as an EMI compared to an employee of a Category C company per the list.
The principal balance of the existing loan will be carried forward, and the amount required as a Top Up will be added to construct a new loan. A suitable tenure will be applied the applicant must have the financial ability to afford the extra EMI.
Process Steps For a Top-Up loan
- The application for the request should be duly filled out and submitted with the required documents.
- An applicant can also Apply for Top Up Personal loan online.
- The Bank will check the CIBIL score of the applicant.
- If required, a physical verification will be conducted at the office and residence premises.
- The eligibility for the loan amount is calculated.
- The underwriter will verify the details and give the decision.
- Post-approval, the disbursal process is initiated, and the loan amount approved as a Top Up is transferred to the applicant’s account electronically.
- The existing loan account is closed, and a new account is generated with the current principal balance and the top-up amount.
- A fresh EMI will be initiated as per the tenure applied.
When is a Top Up Loan Not a Good Option?
Although a
Personal Loan Top Up is convenient and quick to process, all the implications must be considered if a Top-up is unsuitable as per the scenarios below, the applicant has a choice of
Applying For a Parallel Loan which is an additional Personal Loan.
A Top-up Works Best Early in the Tenure
The EMI deducted at the start of the tenure will have a more significant portion of interest than the principal. As the term progresses, the interest factor and principal portion are equal. After a substantial part of the interest is repaid, the principal loan amount forms a significant part of the EMI.
A Top-up later in the term will make the previous loan costlier, as a new amortization schedule is with the approval of the Top-up request. Interest already paid on the principal loan amount will not be considered, and the principal balance of the previous loan will be charged interest as per the new schedule.
If Foreclosure is Planned
The lock-in period for Personal Loans with most financers is 12 months, and if the applicant needs the funds for a shorter time and expects funds shortly to repay the loan, then a Top-Up is not recommended.
The applicant will have to pay another 12 EMI to repay the original loan amount, as a new loan will be generated post a Top-Up.
If The Requirement is For a Lesser Amount.
If smaller amounts are required in an emergency or to tide over a shortfall, then there are better choices than rescheduling an existing Personal Loan with a Top-up, especially if the tenure is passed the mid-term.
On the other hand, if the customer is overleveraged, a Top-up will help to increase eligibility and fulfill requirements.
If The Interest Rate Chargeable Has Increased.
A
Personal Loan Top-up will be processed at the current interest rate as per the terms and conditions of the financer if the interest rate applicable has increased due to the market conditions or the applicant’s profile change, a Top-up will increase the cost of funds for the existing and Top-up loan amount.
Documents Required For a Personal Loan Top-Up.
KYC Documents
Passport Size Photograph
Current Residence Proof - (Driving License/Passport /Voter ID/Utility Bill/Aadhaar Card)
ID Proof - (Driving License/Passport /Voter ID/Aadhaar Card)
Pan Card Copy (Date of Birth Proof)
Aadhaar Card (Mandatory)
Owner Ship Proof (if Residence is Self-owned)
Income Documents
Bank Statement for 3 Months
Salary Slip for 3 Months
Form 16 for the Current Year
| Charges Applicable |
Details |
| Rate of Interest |
11.29%-22% per annum @ monthly reducing balance. |
| Processing Fees |
Minimum 999/- up to 2.5% maximum. |
| Pre-closure Charges |
After 12 months -4% of the principal outstanding
After 36 months- 2% of the principal is outstanding.
|
| Loan Cancellation Charges |
Nil (However, the processing charges will not be refunded
After 36 months- 2% of the principal is outstanding.
|
| Loan Cancellation Charges |
Nil (However, the processing charges will not be refunded.
Interest will be charged on the interim period of loan closure.
|
| Cheque Bounce Charges |
Rs 550/- per cheque Bounce. |
| Charge for Late Payment |
2% Per Month from the Date of Unpaid EMI |
| Cheque Swapping Charges |
Rs 500/- |
| Amortization Schedule Charges |
Rs 200/- |
| Stamp Duty |
At actual as per Applicable Law |
| CIBIL Report Copy Charge |
CIBIL Report Copy Charge |
*Yourloanadvisors.com provides services to its esteemed customers free of charge.
91-9711165183
