Home : Pros And Cons Of Availing Top-Up Loan – akhil mani – Medium
Top up loan is the additional sum of the amount granted by the banks on the existing loans. The time taken for such a transaction is bare minimum. Time is priceless and hence topping up of a loan on time remain undoubtedly an excellent option at the time of cash crunch. The loan top-up does not only reward the customers, but it has its own negative points also. The pros and cons under this blog briefly discuss the same. The bank officials or related agents normally describe the creamy part of going to top ups but detailed analysis as below will assist to evaluate the rational decision.
Pros of Loan Top Up.
· If the bank is agreeing to provide a top up to the existing customer then the bank expresses goodwill against the customer. The credibility of the customer gets augments here, and this also proves that the customer has repaid the previous loan on time.
· Convenient loan payment tenure can be sought from the lender.
· The charges for processing the Top-up loan are minimal when compared to the fresh loans.
· When the income of a person increases, so does the repayment capacity. Top up loans shall help the individual requirement to enjoy a more lavish lifestyle to match their income.
· Paperwork required for going for the Top-up loan is simple as the banks or any lender already has all the documents of the borrower with them.
· When compared with Personal loans the interest rate of loan top-up is very less. Funds from Top-up loans can be had instantly.
· Top up loans are one of the most effective ways to build up a healthy credit score.
Cons of Loan Top Up
· In case of topping up a loan, only existing lenders shall be contacted, even if their terms are stingy.
· The loan amount offered by new banks and interest rates may be cheaper than an existing bank. Since there is a liability of old loan with the previous bank, the borrower might be constrained to take up the amount sanctioned by the previous bank.
· Tax exemption amount for loan top-up is minimum.
· A borrower is getting committed to higher EMI per month when he goes for a top-up. In case of the problem in the job or any kind of financial trouble, repayment might get difficult.
For many borrowers, it is time to look beyond the petty things. Crack a deal with the lender that is most profitable!
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