Personal Loan

What is Flexi Loan and What Are its Benefits?


What is a Flexi Loan?

Flexi loan is a type of personal loan. It credits money to your account instantly. You can use the loan amount as per your requirements. Unlike other loans, Flexi personal loans don’t charge interest on the amount sanctioned to you. Instead, interest is charged only on the money you spend. 

In other words, you will pay interest only for the amount used by you and not for the total amount credited. Flexi Loans allow you to use the funds and repay the interest whenever you wish. They are often referred to as Flexi personal loans. Flexi personal loans are similar to the overdraft facilities provided by banks and other financial institutions. 

What is the Difference Between Personal Loans and Flexi Personal Loans?

Here is how personal loans and Flexi loans differ:

Personal Loans

  • Let’s assume you have borrowed Rs. 1,00,000 as a personal loan from a bank or any other financial institution. You are charged an interest rate of 10% p.a. for this principal amount, and the total period of the loan is 1 year.
  • The bank, in general, will charge you an interest rate of Rs 12,000 for the one-year tenure. Thus, you will be required to pay Rs. 1000 as interest per month.

Flexi Personal Loans

  • For example, if you borrowed Rs 1,00,000 as a flexible personal loan from a bank or an institution at an interest rate of 10% p.a., you are not required to pay an interest rate of Rs 12,000 as you did in a personal loan. Instead, you will be paying interest only on the amount that you withdrew or utilized.
  • Assume that you have used only Rs. 50,000 out of the total Rs. 1,00,000 credited to your account as a Flexi loan. As a result, you will pay only Rs. 6,000 in interest over the course of a year, i.e., Rs. 500 per month.

What are the Eligibility Criteria for Flexi Personal Loans?

The eligibility criteria for Flexi personal loans depend upon various factors. These include the type of employment you have, your age, income, financial obligations, credit score, citizenship, any criminal records you may have, etc.

You can opt for a Flexi loan if you are a salaried employee or a self-employed individual.

But the above criterion is subject to change from bank to bank or from institution to institution.

Another major factor that determines your eligibility for getting a Flexi loan is your total credit (CIBIL) score.

In general, to avail of any type of loan from banks and other financial institutions, it is recommended to maintain a minimum credit score of 700.

What are the Benefits of Flexi Personal Loans?

Below is a list of the advantages of a Flexi loan:

  • Unlimited Withdrawals: Once the loan amount is credited to you, no one can question you on the number of withdrawals. It is because there is no limit on the number of times a Flexi loan can be withdrawn. 
  • No Need For Multiple Applications: In Flexi personal loans, whenever you withdraw money, you will not be required to fill out any application. Hence, no lengthy paperwork or approval is required for using the loan amount credited by the lender. 
  • Lower EMI: With Flexi personal loans, you are not required to use the entire loan amount. As a result, the interest rate and EMIs will be lower, compared to other types of loans.
  • Pre-payment Option: Whenever you have a cash inflow or a lump-sum amount, you can pre-pay towards the total value of the Flexi loan. Furthermore, you will not be charged or penalized for making partial prepayments on the borrowed loan.
  • Bullet Repayment Option: Flexi personal loans not only allow you to make partial prepayments but also provide a bullet repayment option. Bullet repayment is when you can pay back the loan principal and interest rate all at once at the end of the loan’s maturity period, also called its “tenure.”
  • Helps You in Unexpected Situations: Flexi personal loans are a great aid in your unforeseen or unexpected circumstances. The loan amount is credited to your account instantly. Thus, a Flexi loan helps meet both your planned and unplanned needs.
  • Minimum Documentation: As compared to ordinary personal loans, a Flexi loan needs a few documents at the time of application. Usually, an application for a Flexi loan asks for your Aadhaar card, address proof, income tax returns, salary slips, etc.
  • No Need for Collateral: To avail of Flexi personal loans, you do not need to pledge any collateral, assets, or other financial securities.
  • Closing of Loan Before Tenure: If you repay the Flexi loan amount before the maturity date, your loan will be closed. The main advantage of closing the loan before the term is that the interest payments are reduced. However, some banks or institutions may impose charges for early loan repayment. 
  • Easy Cash Flow Management: As your monthly EMI is reduced, you will be better able to manage your cash flows. This helps reduce your cash outflows and expenditures.

Final Takeaway

Flexi personal loans are flexible not only in their name but also in their usage. We hope this article has helped you understand Flexi loans and the importance of maintaining a high CIBIL score. You can easily apply for and get a flexible personal loan with Piramal Finance. 

We, at Piramal Finance, will guide you through each and every step. Our executives are available to answer any queries related to Flexi loans. You can visit Piramal Finance‘s website to learn more about loans and related topics.