A flexi loan or a flexi personal loan is a variant of personal loan. Similar to personal loans, the funds borrowed through flexi personal loan can be used to meet any financial need like medical expenses, house renovations, vacations etc. Due to its flexible terms and conditions, these flexi loans are gaining popularity.
What is a flexi personal loan?
Flexi loans are unsecured loans that are available with pre-approved credit limit. They allow the borrower to withdraw any amount within the set limit any number of times. Unlike traditional personal loan, the flexi loan does not have rigid prepayment conditions. The borrower can prepay the loan amount at their convenience. But, the borrower need to clear the interest amount on regular intervals as decided while availing the loan.
The flexi loan is available to all individuals having a good credit score and stable employment. On the basis of the credit score, the lender decides the limit of the pre-approved loan. The loan is offered in the form of credit line or overdraft facility. The interest charged on such loans is on the loan amount used by the borrower and not on the total loan amount sanctioned.
Benefits and features of flexi personal loan
- Greater flexibility of funds availability – The borrower can withdraw the funds multiple times as and when the need arises. The borrower can withdraw funds multiple times without any fees being charged.
- Flexible repayment terms – The borrower make part payments towards the loan amount multiple times at no extra cost. The borrower can also re-avail the repaid amount whenever needed. This gives a great relief to the borrower.
- Lower interest charged – The borrower needs to regularly settle the interest amount during the tenure of the loan. The interest is charged only on the loan amount being utilised by the borrower and not on the total loan amount sanctioned.
- No collateral is required to avail the loan – The flexi loan does not need any security or collateral to secure the loan amount. This makes the borrowers with no asset to pledge to avail the loan easily.
- Instant and hassle free financing – Flexi loans can get approved instantly without lengthy paper work. Also, the borrower can withdraw multiple times without having to apply for a loan every time.
How does a flexi personal loan work?
A flexi loan works like an overdraft facility. Once a borrower applies for a flexi personal loan, the lender decides on a pre-approved loan amount. The uses various criteria such as borrower’s credit score, repayment capacity, location, income etc. The loan is then disbursed into the borrower’s bank account instantly without any further documentation. The borrower can withdraw the money within the pre-approved credit limit and use it for any purpose.
The interest is charged on the amount withdrawn by the borrower. If the borrower has not withdrawn any amount then no interest will be accrued. Though eligibility criteria may differ among the lenders but both salaried and a self-employed individual can apply for a flexi loan.
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Documents required for availing a flexi personal loan
- Identity proof
- Income proof
- Address proof
- Business proof
- Bank account statement
Some lenders may demand other documents according to their requirements.
Eligibility criteria for a flexi personal loan
Though eligibility criteria may differ from lender to lender but following are the most common criteria:
- Applicant must be aged between 21 years and 60 years
- Applicant must be salaried or self-employed having a stable income
- Applicant must have the minimum credit score required by the lender
- Applicant must have been working since at least past 6 months
Conclusion
Flexi loans are instant, convenient, flexible and affordable financial product. The borrower can withdraw the money within approved credit limit multiple times for any financial requirement. Flexi loans also provide flexibility to the borrower in making repayments. They are affordable as interest is charged on the amount used by the borrower. Thus, with low interest rate charged, flexi loans become pocket friendly. They are unsecured loans which are approved instantly without much documentation. Before applying for a flexi loan, a borrower must check the lender’s eligibility criteria.
IIFL Finance prioritises the need for funds of every borrower. Hence, it offers a variety of loans that have simple eligibility criteria and a straight-forward application process. No matter what type of loan you choose, with IIFL Finance you can enjoy a stress-free borrowing experience and even get a customized repayment schedule.
Frequently Asked Questions
1. What is the difference between a flexi loan and a term loan?
A flexi loan charges interest on the loan amount used while a term loan charges interest on the total loan amount sanctioned.
2. Can I convert my term loan to a flexi loan?
Some lender might allow you the conversion without any additional documentation.
3. Which is better – Term loan or Flexi loan?
Both loans help the borrower to meet his financial requirements. The borrower must make a wise decision depending upon his requirements and the features of the loan.
