What is a personal loan top-up and when should you consider taking it?
As financial needs and aspirations of borrowers evolve, borrowers in the country are increasingly turning towards personal loan top ups to bridge the gap of short term funding and ease things. With the most recent repo rate cut of 50 basis points, things have turned even more complicated for borrowers.
Not only this, the lending norms are also becoming tougher therefore to deal with these challenges it is extremely important to understand the concept behind personal loan top ups and their efficient use to make the most of the rapidly changing economic environment.
A personal loan top up permits an existing borrower to access additional funds on top of their current personal loan. That too without starting any new application from scratch. This facility is generally provided by the same financial institution who provided the original personal loan.
Further, the entire process of providing the top up loan is streamlined and requires minimal documentation and also offers quicker approval compared to a fresh loan application.
Now to avail this service most banks and financial institutions require borrowers to have paid a minimum number of EMIs, usually six to twelve before becoming eligible for a top up on an existing loan. Since the lender already has your basic details such as PAN card, Aadhaar card and repayment history, top ups are processed faster, often within minutes.
Like standard personal loans, top ups also are usually unsecured and can be used for any legitimate purpose, from medical emergencies, home renovation to debt consolidation.
Top up loan interest rates generally mirror those of your original loan, but can sometimes be lower if your credit profile has improved or market conditions are favourable. Current rates in the country range between 10% and 14% per annum.
The loan tenure for top-ups usually aligns with the remaining period of your original loan, though some lenders may allow up to 60 months.
To qualify for a top up loan borrowers must have a clean credit history, a solid credit score generally over 750 and the capacity to repay the additional loan amount. The entire process of application submission is mostly digital.
With options to apply online through the financial institutions website portal. The applications can also be submitted offline by paying a visit to a designated branch.
Top up loans should only be used for serious and genuine needs such as medical emergencies, urgent repairs or consolidation of higher interest debts if it is required to be formalised. Such loans are not meant for discretionary spending.
Borrowers hence should take professional advice and carefully assess their monthly budget before opting for a top up, as it has the potential to increase the total debt and may raise the EMI or extend the loan repayment tenure. It is also important to understand and check the additional charges such as processing fees which can be as high as 5-6% of the loan amount and make things even more difficult. RBI cut repo rate by 50 bps to 5.50% and CRR by 100 bps to boost credit growth on June 6, 2025.
Risk weights are expected to ease for NBFC-MFIs and microfinance loans, improving lending capacity.
Banks like HDFC Bank, PNB along with others have slashed lending rates by 10–50 bps in response to RBI's move.
Personal loan rates now begin around 10.5%, going up to 24% based on credit score along with other crucial factors.
Top-up loans remain viable for good credit profiles, though slightly costlier than before.
Hence, in today's dynamic lending environment personal loan top ups provide quick relief and flexibility to meet urgent needs. Still, it is prudent to use such loans wisely to avoid falling into a debt trap.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
27 minutes ago
- Hans India
11 years of Digital India : Tech turned into a tool to empower the lives of poor says PM
New Delhi: Besides the 'Sabka Saath, Sabka Vikas' pledge, the goal and vision of achieving 'Digital India' is beginning to realise as this forms the core of governance of the incumbent dispensation. The digital revolution, which began 11 years ago, is entrenched in almost every policy-making and public welfare scheme delivery with elaborate plans on how to bring benefits to the poor, downtrodden and marginalised sections. Prime Minister Narendra Modi took to the social media platform X on Thursday and wrote about "leveraging the power of technology in bringing innumerable benefits for people". "Service delivery and transparency have been greatly boosted. Technology has become a means of empowering the lives of the poorest of the poor," he further said. The Digital India initiative, launched by PM Modi in his first term, has gone on to reshape the way the country has grown and developed in the past decade. The governance has become transparent and accessible for every citizen, while it has also unlocked massive opportunities for the common citizen. Direct Benefit Transfer (DBT) marks one of the biggest hallmarks of the Modi government as it ensured seamless and leakage-free delivery of public welfare funds and schemes to crores of poor households. Today, the villages have access to internet services, while the digital payment system is also reaching the rural belts. Today, there are more than 322 schemes across 56 ministries covered under the DBT. More than Rs 44 lakh crore has been transferred directly into the accounts of beneficiaries, while Rs 3.48 lakh crore has been saved by cutting out leakages and preventing middlemen. In the past ten years, there has been a 90-fold increase in DBT transfers, marking a new era of public welfare delivery, laced with speed and transparency. Aadhaar – a unique identity of every citizen is powering the country's digital identity revolution. Today, every citizen of the 140-crore population has a unique 12-digit Aadhaar number. Aadhaar authentication transactions have crossed 150 billion mark. DigiLocker, an application that facilitates document storage online, has given strong impetus to paperless governance. As per official estimates, there are more than 52 crore registered Digilocker users in the country, with over 852 crore documents issued. Under the Jeevan Pramaan yojana, technology was harnessed to bring dignity to human lives. Jeevan Praman Patra has simplified life for pensioners by providing hassle-free digital life certificates. Today, more than 10 crore pensioners are registered, which means they no longer need to visit banks for giving "life certificates" in person. More than 143 lakh 'Digital Life Certificates' have been submitted since November 2024. UMANG App has been instrumental in converging all government services on one platform. It has become a single digital gateway for accessing more than 2,000 services across various government departments. As per records, there are over 8.21 crore registered users, with over 597 crore transactions.
&w=3840&q=100)
Business Standard
an hour ago
- Business Standard
RBI gives 'further' 6-month extension to Yes Bank MD & CEO Prashant Kumar
Yes Bank has told the exchanges that Prashant Kumar, the lender's managing director (MD) and chief executive officer (CEO), has got a six-month extension from the Reserve Bank of India effective October 6. The private-sector bank did not say how many years' extension it had sought from the regulator. '…we would like to inform that RBI, vide its letter dated June 12, 2025, has approved the extension of the tenure of appointment of Prashant Kumar as MD & CEO for a further period of six months, with effect from October 6, 2025, or till the appointment of new MD and CEO/successor taking charge, whichever is earlier,' it said in the exchange notification. Kumar was first appointed the administrator when Yes Bank was reconstructed by the RBI and the government with the help of a consortium of banks, including State Bank of India. He was later appointed MD & CEO. Kumar has worked as deputy MD and chief financial officer of SBI. Kumar received his first extension as Yes Bank's leader in October 2022 for a three-year period till October 2025. Sumitomo Mitsui Banking Corp is acquiring a 20 per cent stake in Yes Bank from SBI and other lenders involved in the lender's reconstruction for over Rs 13,000 crore. Reports had said that amid the deal, Yes Bank's board is considering the appointment of a new MD & CEO and has engaged a headhunting agency to assist in the search. Yes Bank is the second private-sector lender searching for a new chief executive. IndusInd Bank is in the process of appointing a new MD & CEO following the exit of Sumant Kathpalia. Yes Bank was down 0.26 per cent at the BSE a little before 12.30 pm from the previous day's close at Rs 20.16.
Time of India
an hour ago
- Time of India
EPF: Do you need to upload documents on EPFO portal to update your date of joining and leaving a job?
The Employees' Provident Fund Organisation has streamlined the process for EPF members to update their employment history, including joining and exit dates. Members with Aadhaar-validated UANs can now directly update profile details without document uploads. Tired of too many ads? Remove Ads No need to upload documents Who needs to upload documents to update their date of exit and date of joining a job? Tired of too many ads? Remove Ads How to update the date of exit in EPF? The Employees' Provident Fund Organisation has simplified the process to update or correct personal and service related information. If you are an Employee Provident Fund (EPF) member who wants to update your employment history, which includes your joining and exit dates, you can now update or correct your service-related information the revised procedure, the members whose Universal Account Number (UAN) has already been validated through Aadhaar can update their profile details like name, date of birth, gender, nationality, father/mother's name, marital status, spouse name, date of joining and date of leaving themselves without uploading any to the EPFO social media post, "You can update your date of joining and leaving in your EPF account without needing to upload documents or get employer approval. EPFO puts the power in your hands."For members whose UANs were generated prior to October 1, 2017, the process is slightly different. In such cases, updates may require employer certification, as these older UANs may not be EPF members were required to upload documents and obtain employer approval to update their date of joining or exit. However, following a recent procedural revision, eligible members can now make these updates directly through the EPFO portal without needing employer to update date of exit on EPF portalStep 1: Log in using the OTP sent to your registered mobile 2: Under the 'Manage' tab, click on 'Mark Exit'. (Note: This option will be visible only within two months of leaving the job.)Step 3: Select your employer/company from the drop-down 4: Enter your exit date and tick the consent 5: Click on 'Request OTP'. An OTP will be sent to your Aadhaar-registered mobile 7: Enter the OTP, click 'Submit', and confirm the alert prompt to complete the the process is complete, the portal will display a message stating that your date of exit has been successfully updated.
