A Detailed Analysis of Personal Loans Vs. Top-up Loans!

Personal Loan vs Top UP loan

Personal Loan vs Top UP loan

India is a big country with 1.3 billion people. Many individuals living in the country earn only basic monthly income and live from one paycheck to another. From time to time, people belonging to different groups of society resort to loans to raise the much-needed additional funds and meet unavoidable financial requirements with ultimate comfort. After seeing the growing demand for money, banks and financial organizations have introduced numerous loan packages in India’s financial market.

Credit borrowers have multiple choices when looking for loans following a sudden financial emergency. In the crowd of several offers, personal loans and top-up loans are popular among many people. These two loans have their pros and cons. Many times people get confused about which loan is suitable for their needs. In today’s article, we will look into top-up and personal loans’ details and try to determine which one is suitable for frequent credit borrowers. Let’s get started.

A Brief Introduction To Personal Loans And Top-Up Loans

Personal Loans Top-Up Loans
You can take online personal loans with great ease and comfort for almost all purposes. All leading public and private sector banks in India offer these loans to individuals who prove their eligibility and are ready to agree with the terms and conditions set by the chosen Bank. Due to multiple benefits, many people apply for instant personal loans every year and get the requested money after completing all formalities successfully. Usually, banks and financial organizations give a top-up loan to someone who has already taken out a loan and needs additional cash to meet unavoidable financial emergencies. The significant advantage of such a loan is that you can get the requested money in a short time as the bank can easily verify your details using the available data and announce their judgment. In addition, an amicable relationship with the existing banker, good credit score, and excellent repayment ability makes you eligible for top-up loans.

Comparative Analysis of Personal Loans And Top-Up Loans

Before taking a particular loan product and agreeing to the terms and conditions of credit lenders, all borrowers must get more information about the financial package and make sure that they have chosen what they are looking for. Let’s analyze personal loans and top-up loans on different parameters.

  • Loan Amount

Loan Amount

The loan amount is the first factor that drives credit borrowers to look at different loan packages available in the market and choose a deal that offers them the required money without too many Ifs and buts. If you prove your eligibility for personal loans and meet all terms and conditions put forward by the bank, you can get funds from RS 50,000 to Rs 50 lakhs under the provision of personal loans. You can use the received money to meet multiple financial obligations and restore mental peace even in unfavorable situations. Top-up loans allow you to get around 70 to 80% money on your existing debt. However, the amount available under the umbrella of top-up loans varies from one bank to another. Before taking such a loan, you must get more information from Bank executives and do your independent research. Take a top-up loan only when you need some additional cash on an urgent basis for emergency expenses like home improvement, an unavoidable medical bill, etc. Keep in mind that taking extra money as a loan puts additional pressure on your budget and compels you to optimize general expenses to ensure timely payment of the borrowed money.

  • Documentation

Documentation

Documentation is an essential part of any credit lending activity. Banks and financial organizations ask you to submit documents related to your identity, residence, employment, salary credits, existing loans and EMIs, pending bills, credit score reports when you apply for online personal loans. Verifying different documents and completing different formalities consumes a considerable amount of time. The lack of any document delays the loan processing up to a great extent. If you cannot submit the required paper to bank executives in a specific time frame, the bank may rescind your application for personal loans. If you are looking for an easy loan without documents, generate a request for a top-up loan. As the bank already has access to your essential details, its executive can easily verify the required data and determine whether you are eligible for the requested money or not. No further documentation is needed for top-up loans.

Also Read : The Right Time To Take Personal Loan

  • Interest Rates And Processing Fees

Before taking a particular loan, credit borrowers pay great attention to interest rates and processing fees. These two determine the loan affordability, the final amount you get, and the money required for loan repayment. Different banks have different processing fees and interest rates for personal loans and top-up loans. Therefore, you must contact the banker and inquire about these two before finalizing a loan deal. Keep in mind that top-up loans’ interest rates and processing fees are less than personal loans.

  • Loan Processing Time

Frequent credit borrowers always pay more attention to the loan processing time. It’s a period when a bank receives your application for a loan and completes all formalities before issuing you the requested loan amount. In India, numerous people apply for personal loans every year. As a result, Bank executives are always busy on working days sorting out applications and processing them as per merit. It would help if you waited for 10 to 15 days to get a response from the bank after submitting your application for online personal loans. Most people apply for top-up loans with the existing banking partner. So the bank takes a maximum of 2 to 3 days to get in touch with you after receiving your application for top-up loans.

  • Tax benefits

Tax Benefits

If you are looking for tax benefits, you should apply for a top-up loan. The condition is that you should use the received money for the intended purpose only. For example, if you take a top-up loan for home improvement and use the money for the same purpose, you can claim up to a particular amount for tax benefits. There is no such provision with personal loans. To get tax benefits, you must evaluate the offers made by different banks and choose one which offers top-up loans with tax benefit provisions.

  • Loan Tenure

Most banks offer small personal loans for 12 to 60 months. When you apply for top-up loans, banks may give you a long time to repay the borrowed money. Long term personal loans are also available in India.

  • Affordability

Bank executives will extract your previous financial record and creditworthiness with great attention when you apply for a loan. It lets them know your existing income, expenses, EMIs, and other important financial commitments. This allows them to determine whether you are suitable for a personal loan without documents or top-up loans. Instant personal loans without documents are convenient when you need a large amount of money for long-term financial commitments. Top-up personal loans promise to pay 70 to 80% of the existing loan to borrowers. So they are more affordable than online personal loans.

Some Helpful Tips For Choosing The Best Loan Under Your Budget

Many individuals take loans when they have urgent financial commitments and there is a shortage of the required money. Independent financial experts recommend borrowers must do homework before taking small online loans. Research and analysis, vigilance, and straightforward communication with bank executives improves your knowledge about different loan packages and allows you to choose what you need most.

Also Read : Personal Loan Insurance Plans: Protect Yourself from Different Risks!

  • Evaluate The Loan Amount You Need

The primary purpose of any loan package is to help needy people, which is the much-needed money to fulfill unavoidable financial commitments and lead a healthy life quickly. Unfortunately, financial problems keep flourishing from time to time in people’s lives, forcing them to take out a loan sooner than later. In India, most people don’t perform the initial homework and take an inappropriate loan which is unfavourable for them. As a result, they bear tremendous losses and face legal consequences because of hidden clauses. Before taking a loan, you must get complete information and analyze your requirements impartially. You must never take a loan that is beyond your financial capability. It not only makes the Lonely payment quite burdensome but also pushes you into an endless cycle of debt. Take only the required money as a loan and ensure that you repay all EMIs on time.

  • Understand The Growing Importance of Maintaining A Good Credit Score

It wouldn’t be wrong to say that a credit score is a financial indicator. It reflects the overall economic condition of credit borrowers. A person with a good credit score receives preferential treatment when applying for personal loans or any other loan available in the market. On the other hand, individuals with poor credit scores receive rejections from banks and financial organizations. A poor credit score manifests that the person is financially unstable and may not repay the borrowed money. To apply for top-up personal loans and other general personal loans, you need to maintain a minimum credit score of 700 or more.

  • Correct Submission of Your Application

Correct submission of your application is the first step for getting the requested money under instant small loans without documents. Bank executives always find it easier to process applications that carry correct information about borrowers. On the other hand, they face difficulties verifying the information about borrowers if applications have incorrect information about them. Therefore you need to be careful while applying for a loan. Carefully look at the application form and fill it up with correct details. Then, check the supplied data before submitting your application and eliminate the inaccurate information, if any. For ease and convenience, you must prefer an online application method. It becomes easier to submit your application for an instant loan without documents and get an immediate response from the banker.

  • Knowing All Terms And Conditions of The Loan 

All borrowers must familiarize themselves with the terms and conditions of the loan agreement. Personal loans and top-up loans have several clauses and terms and conditions. Knowing all the terms and conditions of a loan agreement enables you to perform your duties very well, protect your interest in the best possible manner, and avoid penalties and legal actions. Ordinary individuals often face difficulties understanding different financial terms. They must take the help of bank executives and try to understand all terms and conditions of the loan agreement. Don’t sign the contract paper if you think the loan is not in your favour.

  • Seek Expert Advice

Ordinary individuals often find it challenging to keep a close eye on the latest development in the financial market. So they usually end up choosing an outdated loan package that doesn’t suit their interest very well. That is why it would be helpful to seek expert advice on personal loans and top-up loans and get detailed information as far as possible. The more information you have, the better decision you will make.

Conclusion

The battle of the personal loan versus top-up loans has been on for several years. Both loans have pros and cons like any other financial product. The requirement and urgency for money, your employment status, credit score, and other factors play an essential role when you choose a particular loan package. Applying for online personal loans will benefit you if you can wait for a few days and need a considerable amount of money.

On the other hand, top-up loans are helpful if you have already taken a loan and need some additional cash for any urgent expenses. You don’t have to make a separate request for a top-up loan. After receiving your application, Bank executives can verify details using the database and give you the requested money if everything goes well. Happy borrowing.