Understanding What is Flexi Personal Loan and When it is Ideal

A personal loan can be a saviour during emergencies and financial crises. This unsecured loan form can be utilised for any personal reason including medical emergencies, home renovation or even buying a car. Similar to personal loans, flexi personal loan with certain distinct characteristics is becoming widely popular. Here’s all you need to know about flexi loans India and how to avail of them.
 

What is a Flexi Personal Loan?

A flexi personal loan is quite similar to a standard loan, except for the fact that it comes with a capping on the cash outflow. In short, it works like an overdraft facility where you can borrow funds up to a pre-approved cash limit as prescribed by your lending facility. A flexi personal loan allows you to withdraw cash up to an allotted threshold and you can instantly borrow funds as and when the need arises.

 Also Read: How Personal Loans Help During An Emergency
 

How Does the Hybrid Flexi Personal Loan Work?

 
Flexi personal loan in India works just like the overdraft facility. Under flexible loans, the financial institution pre-approves your loan amount. The approved amount is deposited into your loan account and you are free to withdraw the funds whenever you need them—as long as you stay within the credit limit. Under flexi personal loan, you can use the amount for any legitimate purpose, and the lender calculates the interest only on the amount that you have withdrawn from your loan account. The amount that you have not used does not accrue any interest. In India, both salaried and self-employed individuals can avail flexi personal loans.

Features of a Flexi Personal Loan and How Different is it from a Regular Personal Loan

 

• A flexi loan is a pre-approved loan. It offers instant disbursal, making funds readily available when the need arises.
• Since a flexi loan is pre-approved, you do not require any additional paperwork to get the loan. In short, it is hassle-free and is available instantly.
• You can avail of any amount under the sanctioned limit. For instance, if you have an allotted sanction of Rs 5 lakh, you may apply for a flexi loan of Rs 3 lakh or any amount below the cap of Rs 5 lakh.
• Interest is charged on the withdrawn amount only. Additionally, the personal loan rate of interest for a flexi loan is usually lower as compared to other personal loan options.
• You can withdraw funds as many times as you want and need not bother with making a new application every time there is a requirement. This saves a lot of time.
• Under the flexi plan, it is possible to repay the principal amount as per your flexibility. You can manage your income accordingly and repay as and when your inflow permits.

 

Flexi Loans vs. Personal Loans: Which is Better?

 

Parameters	Flexi Personal Loans	Regular Personal Loans
Disbursal	When the lender approves your flexible loan application, the funds are transferred to your loan account and you can withdraw money as and when needed. You are not obligated to use the funds all at once.	Once your loan is approved, the financial institution disburses the entire loan amount to your account.
Interest Calculation	The interest is calculated solely on the withdrawn amount and not on the whole sanctioned amount.	The interest is calculated on the entire disbursed loan amount.
Prepayment Charges	Mostly, financial institutions do not levy prepayment charges on hybrid flexi personal loans foreclosure.	Most financial institutions impose a prepayment penalty if you foreclose your term loan before the agreed-upon due date.
EMI Payment	The utilised funds from your loan account and the flexi pay personal loan features determine your EMIs.	When you take a regular personal loan, the financial institution sets up and schedules a repayment plan based on which you must pay your EMI.

 
A flexi loan is usually recommended if you are expecting a steady increase in income soon. Under this plan, you can gradually increase your EMI amount based on your cash inflow. A standard personal loan plan is a better option for those who have a stable income. Remember, both plans serve different requirements.
 
Also Read: Opting for Instant Personal Loan Know How to Get Better Interest Rate
 

Eligibility Requirements for a Flexi Loan

 

• A flexi personal loan calculator can help you assess the amount of loan you can avail of based on your income and other financial commitments.
   
• Eligibility criteria:
  
  For Salaried
  
     1) Must be a citizen of India.
     2) Should have a stable income and be able to produce documentary evidence.
     3) Should fall into age limits as prescribed by the lender.
  
  For Self-Employed
  
    1) Regularly filed income tax returns as proof of income.
    2) Should be a citizen of India.
    3) Should fall into age limits as prescribed by the lender.

      Also Read: 5 Brilliant Ways to Avail a Personal Loan with a Low Credit Score
 

How to Apply for Hybrid Flexi Personal Loans? 

Many financial institutions offer flexible loans of different types. Similarly, the application process for a flexi EMI personal loan differs from one lending institution to another. However, the most common steps involved in the flexi pay personal application process are: 
 

• Visit the website of the lender of your choice. 
• Fill out your details on the online loan application form.
• Choose the desired loan amount along with the repayment tenure.
• Submit the softcopy of all the required documents.
• The financial institution will verify your details and documents.
• Post successful verification of your details, the lender will disburse the amount to your loan account.

 
You may also apply for flexi personal loans offline by visiting the branch of your preferred financial institution and filling out an application. The offline application procedure is similar to the online application process—fill out an application form and submit your documents, among other things.
 

Conclusion

In case of emergencies, a flexi loan can be of great help as you can withdraw the desired amount as and when you want, provided it remains within the upper-cap limit. Some lenders even process the application and disburse the loan amount within 24 hours. Use the lender's personal loan eligibility calculator to check if you can get a flexi loan from them. Make sure to check the lender's credibility and not merely fall for marketing gimmicks before you make a financial commitment to anyone.
 
Disclaimer: This post was first published on 11th March 2021 and has been updated for the latest information, freshness and accuracy.