top up loans

Choosing the Right Loan for You: Personal Loans Vs Top-up Loans

November 03, 2022 • 4458 views

Personal Loan and top-up loans play a significant role in our finances. These unsecured loans enable you to manage your financial plans, such as buying a house or vehicle or running a business, but they also come in handy when you need money for medical expenses, educational purposes, or leisure activities. Both loans provide quick funds to address multiple needs. Let's find out the difference between a Personal Loan and a top-up loan, the documents required, the eligibility criteria, and how to apply.

Understanding Personal Loans

A Personal Loan is an unsecured loan that banks, NBFCs, and online lenders offer to borrowers seeking to fulfil several needs. Lenders use your income, credit score, and repayment history to evaluate your loan eligibility. Since there are many trusted online lenders, you can easily apply for a Personal Loan online. All you need to do is fill in an online form, attach the Personal Loan documents required for evaluation and sit back and relax. Once the lender reviews and approves your Personal Loan documents, the loan will be transferred to your account instantly. With lenders like Poonawalla Fincorp, the Personal Loan approval process is convenient, hassle-free, and requires minimal documentation.

You can use a Personal Loan for multiple purposes, such as weddings, vacations, higher studies, home renovations, medical emergencies, etc.

Understanding Top-up Loans

A top-up loan is an extension on an ongoing existing loan. The existing loan could be a Personal Loan, a home Loan, or even a Business Loan.  There is a misconception that top-up loans are available only on existing home Loans. That's not true; as long as your lender has a top-up loan facility available, they can be taken over different types of loans.  Depending on the underlying loans, top-up loans can be secured or unsecured. Based on this, the specifics of the top-up loans will be set. For a top-up loan, you must complete a certain number of EMI payments on the underlying loan before becoming eligible for a top-up loan.

Also Read: 10 Key Points to Consider While Scaling Your Business in India

Top-Up Loan vs. Personal Loan - Which one to Opt?

 Let us discuss some key attributes that make Personal Loans and top-up loans distinct from one another:

Source of Borrowing

  • Personal Loan: You can get a Personal Loan from banks, NBFCs, etc., at any time if you meet the eligibility criteria and submit the required Personal Loan documents.
  • Top-up loan: It can be availed only over and above your outstanding loan from the same financial institution. If a person wants to avail of the top-up from another lender, they need to transfer their whole outstanding loan to the new lender.


  • Personal Loan: The tenure of Personal Loans is usually up to 5 years.
  • Top-up Loan: The tenure of top-up loans is quite flexible and is generally aligned with the tenure of the existing loan. Thus, if your existing loan is a long-term loan, the remaining tenure for the loan is generally fixed as the tenure for the top-up loan.

Interest Rates  

  • Personal Loan: The interest rate for Personal Loans varies depending upon the lending institution. For e.g.- Poonawalla Fincorp has interest rates starting from as low as 9.99%* p.a. The interest rate charged on your loan also depends on factors like income, employment details, age, credit score, etc.
  • Top-up Loan: The interest rates for top-up loans depend on the underlying existing loan. The interest charged on top-up loans is usually higher by 0.10% to 0.50% compared to the base loan. E.g.- if the Business Loan interest rate is 15%, the top-up loan on this loan would carry an interest rate of 15.10% to 15.50%.

Processing Period and Accessibility 

  • Personal Loan: The processing for a Personal Loan takes a while because the lender runs a thorough background check, which ranges from verifying Personal Loan documents, credit score, previous loan repayment history, income source stability, age, etc. Usually, a no-default borrower is preferred by lenders when lending a Personal Loan.
  • Top-up Loan: The processing time for a top-up loan is less as the lender already has the borrower’s history and verified documents. Usually, a regular EMI-paying borrower is preferred by banks to lend a top-up loan.

Maximum Loan Amount  

  • Personal Loan: The amount of the Personal Loan a borrower can secure varies from lender to lender, as per their limit. However, factors like your credit score and other eligibility conditions do have an impact on the limit.
  • Top-up Loan: A top-up loan can be availed as a fixed percentage of the previous loan's value. This stipulation could vary across lenders and the type of existing loan.

Based on this example, and the other factors discussed here, one can understand that there is no universally applicable advice for such decisions. Both loans have their advantages and disadvantages. It is on the borrower to understand which loan would best fit their set of requirements and situation.

Required Documents for Top-up and Personal Loan

You need to submit the below-mentioned documents to apply:

  • Identity Proof: Aadhaar Card, PAN card, etc.
  • Income Proof: Latest salary slip, bank statement of last three months, etc.
  • Employment Proof: Official employee ID or mail ID.
  • Address Proof: Rent agreement, passport, utility bill, etc.

These documents may vary from one lender to another. You must check the documents on the lender's official website to avoid any confusion and delay. 

Eligibility Criteria for Top-up and Personal Loan

While applying for Top-up and Personal Loan, you need to meet the minimum set criteria by the lender. These eligibility criteria differ from lender to lender. As a borrower, you must check all the requirements beforehand. Below are the eligibility criteria for Top-up and Personal Loan that you must meet:

  • Age – You should be between the age of 24 and 57.
  • Citizenship – You should have Indian citizenship.
  • Employment – You must be a full-time employee at Central Govt, PSU, MNC, Listed, Unlisted Public Ltd, Pvt Ltd, LLP or other companies.
  • Work Experience – You must have work experience of at least one year with one month of stable employment at your current job.
  • Monthly Income – You must have a monthly income of at least Rs.30,000.

How to Apply for a Personal Loan or Top-up Loan online?

You can easily apply for a Personal Loan or top-up loan with the steps given below:

  • Step 1: Click on the 'Apply Now' button.
  • Step 2: Fill in the required details on the loan application form.
  • Step 3: Upload necessary documents.

 On successful verification, the loan will be transferred to your bank account.


Personal Loan and top-up loans both are useful financial solutions. A Personal Loan provides you funds for multiple purposes, a top-up loan provides additional financial support by providing extra funds. In a nutshell, Personal Loan are best suited to get funds for multiple needs like travelling, weddings, overseas education, etc. On the other hand, top-up loans are ideal for emergencies and unexpected expenses. You must secure any of them only after thoroughly reviewing the lending options and your requirements.

*T&C Apply. This rate may vary depending on the policies of the organization.


We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Personal Loan disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

Trending Topics

Contact Us logo Quick Apply CIBIL Score logo Free CIBIL Whatsapp logo Connect on WhatsApp