Personal Loan

Flexi Personal Loans vs. Term Loans: Which is Right for You?


A loan can help you meet large financial requirements even if you don’t currently have the required sums. However, there are multiple types of loans, and not all will suit you correctly.

Moreover, taking the wrong type of loan can cause significant financial loss and inconvenience. So, we will cover the two most popular types of loans and help you make a wise choice. These are flexi personal loans and term loans.

Both of these options will help you fulfill your financial needs, but multiple factors set them apart. These include their purpose, interest rate, repayment mode, tenure, and more. So, let us go ahead and compare both types of loans in detail to help you decide which one you should go for.

Let’s start!

What are Flexi Personal Loans?

Flexi personal loans are great for people who need to take out a loan for a one-time expense and pay it over time with flexibility. They can be paid back in any amount over up to 24 months. So, Flexi loans are the best option if you’re not sure when you’ll have the money. 

You can also withdraw sums as per your requirements and pay interest only on the drawn amount instead of the entire sanctioned sum. Notably, you need to repay the principal amount at the end of the term. But you can also make a partial or full repayment at any time in between, depending on the availability of funds.

Pros and Cons of Flexi Personal Loans

Flexi personal loans offer several benefits over term loans. It is generally a better option unless you prefer scheduled payments.

Pros of Flexi Personal LoansCons of Flexi Personal Loans
Higher liquidityNot ideal if you prefer planned and scheduled payments
The flexibility of prepaying your loanMay get cumbersome if the lender’s systems are inefficient
Minimal or no documentation is requiredNot ideal for long-term loans or large amounts
The interest rate is charged daily and is payable every month 
Hassle-free transactions 
Low renewal fees 
Lower interest and EMI amounts 

What are Term Loans?

A term loan generally comes with a fixed tenure and EMI. Term loans are suitable for those who want to borrow money for an ongoing expense, like paying off their car or mortgage. Term loans are usually paid back over a year or two with fixed monthly payments. So, they’re better if you know exactly when you’ll have the money at your disposal.

For example, suppose you take a Rs. 1 lakh term loan from the bank at 11% p.a. for one year. The EMI for the loan comes to around Rs 8838 with a fixed one-year tenure.

Pros and Cons of Term Loans

Pros of Term LoansCons of Term Loans
A predictable payment scheduleRequires collateral
Early loan repayment is possibleStringent eligibility requirements
Lower interest ratesSlow funding time
Higher loan amount and duration 
Helps to achieve long-term goals 

Difference Between Flexi Personal Loan Vs. Term Loan

Term loans and flexi loans differ in their payment flexibility, interest amounts, approval times, and various other factors. And you must understand their differences to select the right type of loan for your purpose. So, let’s check out the differences between the two loan types with this simple comparison table:

Flexi LoanTerm Loan
Flexi loans allow you to withdraw only the amount required from your bank account. You need to stay within your sanctioned loan limit.A term loan gets approved by the lenders for lump-sum use. Your sanctioned amount will be disbursed into your bank account after your loan is approved.
Flexi loans give you instant approval and disbursal within 24 hours. Most lenders also provide online approval and disbursal of your loan.Term loans are approved after verification of your documents, which can take several days.
Interest on the Flexi loan will be applied only to the amount withdrawn, not the entire sanctioned amount.Interest is applied to the entire sanctioned amount.
It is generally between 12 to 60 months period.A term loan’s tenure can vary from 1 year to 10 or 30 years.
Flexi personal loans offer flexibility in their repayment periods.Term loans have a fixed payment schedule.

Frequently Asked Questions

Here are some common questions related to Flexi loans and term loans and their answers:

  • Where to use a flexi personal loan?Flexi personal loans generally come with flexible end-usage. So they can be taken and used to meet various personal financial needs of a person. 
  • Can you pay a Flexi loan early?Yes, you can repay your flexi personal loan early as the payment schedule is flexible. You can time your payments to match the availability of funds. 
  • What is the maximum tenure of a flexi loan?The loan tenure of a flexi personal loan varies across different lenders. But it is generally between 12 to 60 months period. 
  • What is the maximum tenure of a term loan?A term loan’s tenure can vary from 1 year to 10 or 30 years. You should use it for large expenses that you plan to repay in the long run. 
  • What is the maximum amount of a loan I can avail of?You get a pre-approved loan limit for any loan that is based on your credit profile.

Key Takeaways

The main differences between the two types of loans are the tenure, interest amounts, purpose, liquidity, approval times, and repayment method flexibility. If you want a quick personal loan for the short term that you can pay back at your convenience, you should go for a flexi personal loan. However, a term loan is better if you want a large loan that you pay back in the long run in a scheduled manner.

So, go for flexi personal loans if you need money quickly for daily requirements and prefer flexibility. And take a term loan if you want to make a big expenditure and repay it in a planned manner in the long run. Such an expense can be buying a car, a house, or making a large investment.