Personal Loans come in handy for a whole bunch of things like medical treatments, wedding preparations, family trips, among others. These loans come at attractive interest rates and flexible tenures. An alternative to this is a Flexi Loan, which is basically a line of credit from which you can withdraw funds as and when you want. There is no specific period for repayment, and you can pay off the funds in a manner of your choosing. A lot of companies offer fast Personal Loan and Flexi Loan. Let’s examine the difference between Personal and Flexi loans, so you can choose what fits you the best.
What is a Personal Loan?
When you go for a Personal Loan, you get to borrow only the amount you apply for from a financial institution, such as a bank or an NBFC like Fullerton India. Unlike an auto loan, where the finances are used for the purchase of a vehicle, a person has the freedom to use it for several things.
A Personal Loan help covers the cost of –
- Home renovation
- Medical treatment
- Buying home items or appliances
- Paying off debt
And you can find fast Personal Loan offers easily nowadays.
When you need cash, you can use a pre-approved Flexi loan that comes with a fixed maximum limit. Most lenders provide flexible repayment terms with reasonable interest rates on Flexi loans. The key benefit of obtaining this loan is that lenders only impose interest on the amount you use from the overdraft limit. So interest is not charged on the total loan amount approved by the lender.
A Personal Loan comes with less interest rate than a Flexi loan, which will benefit you financially.
Personal Loans vs. Flexi Loans: Know the Difference
|Particulars||Personal Loan||Flexi Loan|
|Type||A loan account where the NBFC disburses the loan to the borrower’s bank account.||An overdraft account from which you can withdraw funds up to the approved limit.|
|Amount||The loan amount is based on age, income and credit record.||The line of credit is extended to the borrower once they qualify for the same per the lender’s criteria.|
|EMI||EMI is constant throughout the tenure.||EMI goes high based on the usage of the loan amount and current interest rate.|
Personal Loan Benefits
1. No Collateral Needed
Personal Loans are unsecured, meaning you can get one without putting up any security. Because of this, you can get a Personal Loan more easily than a home or auto loan.
2. Fast Approval
Most of the time, Personal Loans are granted within 24-48* hours. And if you have a good credit history and a CIBIL score of 750 or more, your application will be approved quickly.
3. Credit Score Improvement
Getting affordable Personal Loans and making on-time payments is an excellent strategy to raise your credit score in case you have a poor credit history.
Personal Loans don’t have restrictions like house or vehicle loans and you can use them for a range of needs. One of the factors contributing to their popularity is the flexibility of usage and repayment tenure they offer.
5. Minimal Paperwork
There are few Personal Loan document requirements for online Personal Loans, such as –
- PAN card
- ID proof such as Aadhaar, Passport, Driving licence, etc.
- Bank Statement (6 months)
- Salary slips and IT returns for the salaried (3 months)
- Income proof, business proof, and IT returns for the self-employed
Benefits of Flexi Loan
1. Fixed Credit Limit
You get a line of credit in a Flexi Loan which you can use. It is up to you whether you want to withdraw a part of, or all the funds from the overdraft facility.
2. Quick Approval
A Flexi loan is approved quickly and requires a few documents. You can apply for one without any hassle of going through a long queue at the lending institution branch.
3. Free to use when needed
You can use the Flexi amount for anything; you don’t need to specify the usage. Just withdraw funds from your account and pay them back whenever you have extra funds, such as a bonus.
4. No Restrictions on Repayment
The repayment of a Flexi Loan doesn’t include a fixed tenure, so you can pay back the used loan amount whenever you want. By paying back the loan early, you can save yourself from interest charges.
Flexi loans may have a few advantages, but they also carry greater risks that make them less viable whereas a Personal Loan on the other hand, is suitable for many needs. Any borrower must be diligent and look up different lenders before settling on the one providing fast Personal Loans with the best interest rates and flexible loan repayment tenures. After going through the details of Personal and Flexi Loan, the choice is yours to make.