What is Flexi Loan? | Features, Benefits & How to Apply For It


Flexi Loan – Meaning and Definition

A Flexi Loan is a flexible personal loan with the facility offered by banks and NBFCs. The lender charges interest only on the utilised amount, not the total limit sanctioned.

You can avail of a Flexi Loan facility with a Personal Loan, a Business Loan, and any other short-term unsecured loan. The interest rate and tenure of such loans are set by the lender, keeping in mind your credit profile, income, and collateral value (if any).

Like regular loans, repayment of flexi loans can affect your credit score. You must have a good credit score to apply for a Flexi Loan from your lender. Timely repayments over time can increase your credit score significantly.

Key Takeaways

  • Lenders will charge interest only on the amount you withdraw, not the total sanctioned amount. You can repay the loan any time you have the necessary funds
  • You can avail a Flexi Loan at any time with a Personal Loan, a Business Loan or other unsecured loans from any lender providing this facility. Lenders will sanction your application after analysing your credit profile and income source.
  • You do not need to pledge any collateral for a Flexi Loan while applying. All self-employed and salaried individuals can apply for this loan. However, the eligibility criteria might vary between lenders.

Features of Flexi-Personal Loan

Here are the significant features of a Flexi Loan:

  • Flexible Repayment Schedule
    Unlike regular personal or secured loans, flexi loans do not have a fixed date for repayment of dues. You can repay the withdrawn amount within the tenure at your convenience and availability of cash. Furthermore, you do not need to intimate your lender before making the repayments.
  • Comparatively Lower Interest
    A Flexi Loan bears interest only on the utilised amount rather than the entire sanctioned limit. Therefore, the interest rate is comparatively lower than that of typical loans. Consequently, opting for a flexi loan will help you save significantly on interest.
  • Easy Access to Funds
    After your lender sanctions your flexi loan request, you can withdraw any amount within the given limit whenever needed.
  • Multiple Withdrawals
    You can withdraw funds any number of times until the sanctioned loan amount is exhausted. The lender will charge interest rates only on the withdrawn amounts. So, you can consider withdrawing cash again after clearing your previous month’s dues.
    This can help you manage your finances well with small debts and focus on savings with future cash flow.
  • Collateral Is Not Mandatory
    You do not need to specify a reason or pledge collateral if you are opting for a Flexi Loan with your existing lending institution.

Flexible and Reduced EMI

As stated before, lenders will levy interest rates only on the amount you withdraw. The interest is calculated on a daily basis, so you can reduce your outstanding balance by paying previous dues. This saves a lot on interest payments for Flexi Loans compared to regular loans.

Furthermore, lower interest means reduced EMI at the time of repayment. This makes repayment of dues more convenient. You can repay the debt at any time during the tenure. There is no fixed due date for EMI payments, thus you can pay them at your convenience.

However, it is important to note that lenders will set a tenure and interest rate after analysing your profile. This will also vary between lending institutions and your repayment history.

How Does the Flexi Personal Loan Work?

The working of a Flexi Personal Loan is very similar to a Personal Loan that can be used for any purpose. However, instead of a lump sum credited to your account, the lender approves a maximum borrowing limit. Once sanctioned, you can make multiple withdrawals within the stated limit, and interest will be charged only on the withdrawn amount.

Repay it conveniently at any time without prior intimidation. Any salaried and self-employed individuals can apply for flexi loans. However, the eligibility criteria might vary between lenders.

Final Word

Flexi Loan eliminates the elaborate loan approval processes of a regular Personal Loan. Also, a Personal Loan charges interest on the entire sanctioned amount. However, a flexi loan will charge interest on your withdrawal amount.

Repayment of a Flexi Loan is thus easy and more manageable than regular loans. There is no fixed due date set by banks and NBFCs for repayment of the dues. Thus, it can help you build a stronger credit score quickly. As per RBI guidelines, banks and NBFCs cannot charge prepayment fees for overdraft and flexi loan facilities.

Most often, flexi loans are pre-approved. Hence, you do not need to go through long documentation procedures. You can also withdraw the amount anytime and repay it as soon as funds are available.

Other Words

  • Fixed Interest Rates
  • Floating Interest Rates

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