When your existing financial loan fails to meet your financial requirements, you are left with very few options. Either you can apply for a fresh loan or apply for a Top Up Loan if the lender is offering the service. Now, which option to go for is solely your decision, but knowing the benefits of one loan over another is necessary before you proceed.
Easily Available: A new loan would mean going through the long and tiring documentation process again. Plus, you have to prove your eligibility again for the new loan. Whereas, being an existing personal/home loan customer you have already verified your eligibility, so you won’t be asked to go through the whole process again.
Minimal or No Documentation: The lender you choose to take a top-up loan from already has your KYC documents, and your loan eligibility was also verified once. So, there are 99% chances that your lender won’t ask for any documents for top-up loan approval, though there can be exceptions where the lender might ask for few documents.
Interest Rate: Taking a fresh loan will mean a different interest rate which will usually be on the higher side. Whereas, a top-up loan is available at a lower interest rate, similar to the interest rate of the home loan. The interest rate on top-up loans can range in-between 8-12%, whereas interest rate of personal loan can be as high as 20%.
Faster Approval: A top-up loan is offered to an existing home loan or personal loan who are already verified by the lender, thus there is no requirement to follow the lengthy process for approval. Hence, a top-up loan application is approved faster than another financial loan in the given circumstances. Whereas, you will have to wait for some time to get your new loan approved.