Instead of selling an asset to raise money, you can raise the necessary funds on the personal loan that you are already servicing. It's called a personal loan top up and it's a handy device to raise money quickly.
Taking a personal loan is an easy option for most people with a good credit history and sufficient money in the bank. If you are a good customer, you may even have a pre-approved personal loan in your name.
But after taking the personal loan a few years ago, you are now faced with a situation where you urgently need money. You can take a personal loan top up.
What is a personal loan top up?
If you already have a personal loan, you must be focussed on repaying it at the earliest opportunity. However, the ebb and flow of life is such that you can never predict when you will need money for an urgent requirement again.
At this point, you might consider selling or monetising an asset to raise money. You might wish to mortgage your property, or sell your car or even take a loan against gold ornaments. But there is a simpler way to raise the necessary money by way of a personal loan top up.
As the name suggests, it is a loan that you take additionally over and above the personal loan that you are already repaying. The lending institution grants the top up personal loan subject to certain provisos, however:
- You can apply for the personal loan top up from the same lender only
- Your current personal loan should be at least one year old before you apply for the top up personal loan
- Your repayment history should be clear, with zero defaults
- You should ideally not have other loans, apart from the personal loan that you are repaying
How taking a top up personal loan helps you
You don't need to sell any of your assets or monetise them when you take the top up personal loan. Besides, there are other benefits as well:
* No repeat documentation. Since the bank already has your documents for the personal loan, you do not need to submit fresh documents for the personal loan top up. So the process goes by much faster and you can get the money quickly.
* The lender doesn't ask why you need the loan. Just like in a personal loan, the lending institution does not concern itself with why you require the top up personal loan. The lender is only interested in your loan eligibility and repayment capability.
* The interest rate is almost the same. Most leading banks in India charge a marginally higher rate of interest on the top up loan.
* The tenure may be longer than the personal loan tenure. Depending on the lending institution you borrow the top up loan from, the tenure may be longer than that of a personal loan.