What Is Flexi Personal Loan and How Does It Work?

What is a Flexi Personal Loan?

A Flexi Personal Loan, also known as Flexible Personal Loan, is a type of personal loan that provides you with a pre-approved credit limit from a lender (bank/NBFC), which can be withdrawn or used when you need it.

Here are the key features of the Flexi Personal Loan:

• The Flexi Personal Loan does not have any restriction on the end-use of the loan. So, you can use the loan amount for any purpose, as far as it is legitimate. For example, home renovation, education, wedding, party, buying electronic items, furniture, etc.

• Loan repayment can be done at the borrower's convenience. However, the interest needs to be paid every month.

• The interest rate of Flexi Personal Loans differs from lender to lender and depends on several factors like loan amount, credit score, loan tenure, etc.

• The amount is offered as a pre-approved credit limit, similar to an overdraft facility. Hence, the interest is charged only if and when the amount is used.

• The borrowers can repay the Flexi Personal Loan as and when it is convenient for them. The lenders do not charge prepayment fees on these loans.

• With an option to apply for these loans online, individuals can apply and get the money in their bank account from the comfort of their homes.

• Since it is another variant of a Personal Loan, the Flexi Personal Loans are unsecured and do not need the borrower to provide any collateral or security to avail of the loan.

• The Flexi Personal Loans generally have a fixed interest rate. Fixed EMIs make the loan repayment convenient to the borrowers.

Join Now: PersonalFN is now on Telegram. Join FREE Today to get ‘Daily Wealth Letter’ and Exclusive Updates on Mutual Funds

How does the Flexi Personal Loan work?

The Flexi Personal Loan works similar to an overdraft facility. The lenders offer pre-approved credit line to the eligible customers. The pre-approved limit differs from customer to customer and is decided based on several factors like the customer's repayment capacity, credit score, income, location, etc.

If you are in need of instant cash, you can get this amount disbursed in your bank account without any additional documentation or formalities. The lender charges interest only on the amount used. There will not be any interest charged on the unused/balance amount. For example, if you have a pre-approved Flexi Loan limit of Rs 5 Lakhs and you withdraw only 2 Lakhs out of it, you will be charged interest only on Rs 2 Lakhs.

Before getting the loan amount disbursed, it is advisable to carefully read the loan agreement, terms and conditions, etc., to avoid any future disputes. If you do not have a pre-approved limit sanctioned, you can apply for it with your preferred lender and use the limit when in need.

What are the things you should consider before opting for a Flexi Personal Loan?

A Flexi Personal Loan has its advantages and disadvantages; here are the factors to consider before you avail of a Flexi Loan:

1. Interest Rate:

The rate of interest is the major deciding factor because, just like regular Personal Loans, Flexi Personal Loans have the highest rate of interest, and it generally ranges from 12% p.a. to 28% p.a. When your repayment tenure is of a longer duration of 4-5 years, you end up paying a lot more than the principal amount.

2. Other Charges:

If you want to repay the loan, the lenders do not charge you with the prepayment fees. However, there are several other fees and charges you should consider before opting for the loan, such as processing fees, late payment fees, etc.

3. Reliability of the Lender:

Before opting for a loan, it is crucial to make sure the lender is reliable. With many lenders offering online instant loans, there are many fraudulent activities taking place. Hence, it is advisable to compare different lenders on different parameters, such as benefits, interest rates, customer reviews, customer service, etc., and choose the lender wisely.

4. Reason to Avail of the Loan:

First, it is crucial to analyse your needs and wants so you can resist the temptation to splurge if it is not an absolute necessity. A Flexi Personal Loan is the best choice in case of an emergency, particularly when you do not have any other financial support and need funds urgently. Sadly, people often apply for Personal Loans for instant gratification and put themselves under stress, paying hefty EMIs.

What are the eligibility criteria for a Flexi Personal Loan?

Each lender has different eligibility criteria for a Flexi Personal Loan, but here are the general eligibility criteria followed by most lenders:

• You should be an Indian citizen living in the locations where the Flexi Personal Loan is offered by the lender

• You should be between 21 years to 58 years of age

• You should be a salaried employee of an MNC, a public sector, or a private sector company

• You should have a minimum income of Rs 15,000 per month

• You should have a minimum work experience of 1 year

• You should be working with the same employer for at least 6 months

What are the documents required for a Flexi Personal Loan?

If you already have a pre-approved Flexi Personal Loan limit, you do not need to provide any documents. But if you are applying for the same, make sure you have all the required documents ready. Since it is an unsecured loan, lenders do not ask for many documents. However, you should check the lender's official website or ask the bank representative to provide you with the list of required documents. Keeping all the documents handy will save your loan processing time. The lenders typically ask for the following documents:

• Identity Proof

  PAN Card, AADHAR Card, Passport, etc.

• Address Proof

  AADHAR Card, Voter ID, Passport, Electricity Bill, etc.

• Income Proof

  Last 3 to 6 months' salary slips

  Experience Certificate

How to apply for a Flexi Personal Loan?

If you have a pre-approved Flexi Personal Loan credit limit, you simply have to login into your online account and get the amount credited into your savings bank account.

In case you want to apply for the credit limit, You need to follow these steps:

• Once you have finalised the lender, visit the official website of the lender (some lenders also offer the service through their mobile apps)

• Go to the loans sections and choose Flexi Personal Loan

• Click on 'Apply Now'

• Enter your personal details and submit the form

• The lender will assess your details, and you will receive a call or SMS accordingly

• You will have to upload the necessary documents asked by the lender or request a document pick up

• Once approved, the lender will immediately sanction you a pre-approved Flexi Personal Loan credit limit, which can be withdrawn as and when required

If you want to apply for the loan offline, you need to visit the nearest branch of your preferred lender, and the lender's representative will guide you through the process.

To Conclude:

You can easily apply for a Flexi Personal Loan at any leading bank or NBFC. It offers flexibility to the borrowers in terms of using the amount and repayment. Although a Personal Loan is an urgent requirement in most cases, you should not opt for it in a hurry. It is advisable to do your research, compare the lenders on different parameters, read the terms and conditions, and choose the lender with whom your requirements match the best.

Warm Regards,
Ketki Jadhav
Content Writer