What Is a Flexible Loan and What Are Its Benefits?

A flexible loan is a type of personal loan with a set credit limit. Depending on your credit history, the lender will give you a credit line or an overdraft facility as a pre-approved cash limit. The interest rate on a flexible loan is charged only on the amount that you have borrowed or used, not on the total approved amount.

You can pay back the loan amount whenever you want. But you have to pay off the interest each month. You can also pay off the loan early if you have extra cash. Anyone with a job or a stable source of income can take out a flexible loan to use the money for any financial need.

Benefits of Flexible Loan

A flexible loan is better than a personal loan or any other type of loan in several ways.

• All-Time Availability of FundsYou can get a flexible loan to help you get out of any financial emergency that needs urgent cash. Once you have established a flexible loan limit, you can withdraw funds in as many instalments as possible.
• Option to Pay AheadIf you have additional funds, you can repay this loan early. The standard payout process is also easy because you only borrow what you require and can pay it back quickly. Use a flexible loan calculator to figure out how much your loan will cost you with interest.
• Moderate Interest RateFlexible loans have low interest rates. Also, the rate only applies to the amount you take out, not the total loan limit your lender gives you.
• Many Chances to WithdrawUnlike a regular loan where you get the whole amount at once, a flexible loan allows many chances to make withdrawals. You can take out more money once you pay back the previous withdrawal amount.

Eligibility Criteria: Salaried Applicants

• Nationality: Indian citizen or residing in an Indian city
• Age: Approximately 21-67 years
• CIBIL Score: 750+
• Employment: Private, public, or MNC employee
• Minimum Salary: Depends on where you live

Eligibility Criteria: Self-Employed Applicants

• Nationality: Indian
• Age: Approximately 24-70 years
• CIBIL Score: 685+
• Business Continuation: Minimum 3 years

These are the standard criteria for a flexible loan application. The specifics might change according to the lender. So, you must check your eligibility against your lender’s criteria before applying.

Documents Required

If you want to get a flexible loan for the first time, you must keep some documents ready. Because it is an unsecured loan, you do not need to turn in many documents. You can look at the lender’s website or ask a representative for the documents you will need. Here is what most lenders ask for:

• Income ProofSalaried workers must show their pay stubs from the last 3-6 months.
• Identity ProofEither a PAN card, Aadhaar card, or passport.
• Business ProofGST registration and document filing, Certificate of Practice, Shop Act license, Memorandum of Agreement and Articles of Agreement, Partnership Deed.
• Address ProofEither a voter’s card, Aadhaar card, driving license, electricity bill, or passport.
• Bank Account StatementSelf-employed people must show a bank account statement from the last 6 months or income tax returns.

Process Of Application

• Step 1: Go to the bank or the lender’s website.
• Step 2: Click on the link ‘Flexible Personal Loan’. Most likely, this option will be under the ‘Products’ tab on your lender’s website.
• Step 3: Click on the ‘Apply Now’ button.
• Step 4: Fill out the application form with all the necessary details.
• Step 5: Upload all of the required documents.

To get a flexible loan, you can also go to the nearest branch of your bank or lender and submit an offline application.

Difference Between a Flexible Loan And a Regular Personal Loan

A flexible loan might be a smarter choice over a traditional personal loan because of the following reasons:

• Financial Planning In conventional loans, the loan amount is paid out all at once. You can spend as much money as you wish to right away. On the other hand, with a flexible loan, you cannot borrow more than a certain amount. It guarantees that you borrow only the amount you need, hence not spending away a sum greater than your need. This helps you practice financial discipline.
• Flexible Repayment A personal loan has a set length of time, with a fixed number and amount of EMIs. For a flexible loan, the payout is more flexible. You only pay back the amount that you borrow. For some installations, you can also choose to only pay the interest, not the principal. You can lower the interest by making prepayments. In the end, flexible loans save money.
• Feasible Interest Rates Personal loans do have some benefits, but flexible personal loans are easier to use. A lot of lenders offer flexible loans at reasonable interest rates. With a personal loan, there is a fixed interest, and it is added to the whole loan amount. With a flexible loan, you only pay interest on the borrowed sum, not the whole approved amount.
• Unique Offers Your lender will make your flexible loan offer unique by considering your credit score, salary, and other criteria. The interest rates are reasonably low for people with good credit and high or steady salaries.

Conclusion

When money is tight, flexible loans can come to your rescue. With the benefits and easy terms of such loans, you can plan your finances well and keep yourself debt-free. Make sure you look at the interest rates charged by different lenders and compare them.

If you want to get a loan approved quickly without much hassle and paperwork, visit Piramal Finance. It is a great financing option for everyone. Read their articles on other such financial topics and check out their products and services.