A Flexi Loan or Flexi Personal Loan is similar to an overdraft facility, which allows you to borrow funds up to a certain limit approved by your lender. In this type of personal loan, the interest is charged only on the amount used and not on the amount sanctioned. The loan amount can be used for any purpose and prepaid as per convenience except for the interest amount, which needs to be paid as per the agreed terms and conditions. Read on to find out more about Flexi Personal Loans including its features, eligibility criteria and documentation.
Features and Benefits of Flexi Personal Loans
Following are some of the key features and benefits of flexi loans:
- All Time Access to Funds: Withdraw funds anytime as per your requirement within the credit limit approved by your lender.
- Flexible Repayment: Clear the outstanding principal when you have excess funds as per your convenience generally without any additional charges/ penalties.
- Multiple Withdrawals: Withdraw funds as many times you want within the approved credit limit, without any extra charge, additional documentation or fresh loan application.
- Lower Interest Payable: Save on total interest payable as the interest is calculated only on the amount you withdraw and not the entire amount sanctioned by the lender. This implies that if you get a loan of Rs. 10 lakh, but withdraw only 5 lakh, you will be paying interest only for Rs. 5 lakh. As a result, your EMIs will be low, making the loan repayment easy.
- No Collateral/Security Required: Get flexi personal loan without pledging collateral or security to your lender.
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Interest Rate for Flexi Personal Loan
The following table summarizes the interest rate of flexi loans as offered by some leading lenders:
|Name of the Lender||Rate of Interest (p.a)|
|Bajaj Finserv||7.50% onwards|
|ICICI Bank||7.50% onwards|
Flexi Loan Eligibility Criteria
Generally, both salaried and self-employed individuals can apply for a flexi personal loan. However, the exact eligibility criteria to avail a flexi loan may vary across lenders and as per an individual applicant profile. Some factors that lenders consider when assessing eligibility for a flexi loan include your age, income, job/business continuity, employment type and existing financial liabilities.
Moreover, your credit score too affects your loan eligibility. A high credit score (preferably 750 and above) not only improves the chances of loan approval but also of getting the loan at lower interest rates and better terms and conditions. Therefore, one must check credit score before applying for a loan and if found low must try to improve it. If you don’t know your credit score, check it at Paisabazaar and get monthly updates and credit advisory service, all for free.
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Comparison of Flexi Personal Loans
The following table shows a comparison between the key features of Flexi Personal Loans offered by leading lenders in the country:
|Particulars||Bajaj Finserv||ICICI Bank|
|Borrower Profile||Self-employed and Salaried individuals||ICICI Bank Salary Account Customers|
|Interest Rate||As per individual applicant profile||12% – 14% p.a.|
|Tenure||Depends on your preference and loan sanctioning conditions||12 months, after that the facility will be auto renewed if it meets the bank’s norms, unless the customer gives closure request.|
|Loan Amount||As per individual applicant profile||As per individual applicant profile|
|Processing Fee||0.25% of loan amount + GST||Starting at Rs. 1,999 + GST|
Documents Required for a Flexi Personal Loan
The common documents required to avail a flexi personal loan are similar to those required for a term loan. Some key documents needed to apply for a flexi loan are:
- Identity Proof: PAN Card/Aadhaar Card/Voter’s ID/Driving License/Passport
- Address Proof: Aadhaar Card/Utility Bill (not more than 3 months old)/Lease/Property Purchase Agreement/Bank Account Statement/Driving License/Passport
- Income Proof:
- Salaried Individuals – Salary Slips/Form 16/Bank Account Statement
- Self-employed Individuals – Bank Account Statement/ Previous Years’ ITR/ P&L Statement and Balance Sheet
- Business Proof (for self-employed individuals & professionals): Certificate of Practice/GST Registration and Filing Documents/Partnership Deed/MOA & AOA/ Shop Act License
Note: The above list of documents is indicative and the lender may ask for more documents depending on an individual applicant profile.
How to Apply for a Flexi Personal Loan?
Flexi personal loan as a product may differ from one lender to another. Therefore, the steps to apply for a flexi loan may also differ across lenders. However, in general, the flexi personal loan application process involves the following steps:
- Visit the lender’s website/mobile app (in case any) or the nearest branch office and fill out the loan application form.
- Select the desired loan amount and tenure.
- Submit the required documents.
- After successful verification of the details provided, the approved amount shall be credited to your loan account. You can withdraw funds as per your requirement and transfer them to your bank account.
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What is the difference between a Term Loan and Flexi Loan?
|Flexi Loan Vs. Term Loan|
|Basis||Term Loan||Flexi Loan|
|Nature||The entire approved loan amount is disbursed to your account.||The approved amount is credited to your loan account and can be withdrawn as per your requirement.|
|Interest Calculation||Interest is charged on the entire loan amount.||Interest is charged only on the amount you use/withdraw out of the total credit limit sanctioned by the lender.|
|Pre-payment Charges||Most lenders levy a pre-payment fee.||Prepayments can usually be made without any additional charges.|
|EMI Payments||There is a fixed and structured schedule to make EMI payments.||EMI payments vary depending on different factors including features of the product and the amount you withdrew.|
Q1. Is there a difference between a ‘flexi personal loan’ and a ‘personal line of credit’?
No. Both of the terms, ‘flexi personal loan’ and a ‘personal line of credit,’ usually mean the same and offer the same set of features. In most cases, it’s just a difference in name from one provider to another. However, in some rare cases, a personal line of credit might have an interest-free period which is not usually applicable in case of a flexi personal loan.
Q2. How can I use a flexi loan?
Flexi loans come with flexible end-usage and can be availed to meet any personal financial need.
Q3. How much interest is charged on a flexi loan?
Flexi personal loans are usually offered at lower or sometimes comparative rates similar to regular personal loans. However, the applicable rate of interest depends on multiple factors including your credit score, repayment capacity, type of employment and existing financial liabilities.
Q4. How is interest calculated on a flexi personal loan?
A number of lenders calculate interest rate on a flexi loan on a daily basis, as per the amount utilized by the end of the day. However, this may differ from one lender to another. Moreover, the interest is only calculated on the amount utilised and not on the entire credit limit sanctioned. This is what sets a flexi loan apart from a regular personal loan. This is how it helps you save on the total interest payout.
Q5. How can I repay my flexi personal loan?
You can repay your flexi loan in easy EMIs. In case of flexi loans, you just have to repay the amount that you utilise and not the entire loan amount sanctioned by the lender. In some cases, lenders also offer you an option to pay only interest as your instalment during the initial years of your loan tenure. You can also choose to prepay your flexi loan before the end of its complete tenure without any prepayment penalties.
Q6. Is there a limit to the number of times I can withdraw and make re payments on my flexi loan?
No, there is no limit on the number of times you can withdraw funds from the loan account and make repayments. However, you must ensure that you withdraw an amount within the credit limit sanctioned by your lender.
Q7. Do all banks and NBFCs in India offer flexi personal loans?
No, not all banks and financial institutions in India offer flexi loans. Some top providers of flexi loans in India include Bajaj Finserv, ICICI Bank and MoneyTap. The flexi personal loan offered in each case is slightly different from the other. However, the general idea of the loan remains the same.