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A Flexi Personal Loan is a personal loan where the maximum credit limit is set by the lender. A borrower can withdraw the loan either in full or in part within the loan tenure and repay at their convenience. Flexi loans can be thought of as a bag of funds. The bag has a maximum limit, but within those limits, a borrower can extract and refill as per their comfort.
Let us say a borrower borrows a flexi-term loan of 10 lakhs. And they encounter an urgent, unavoidable expense of 2 lakhs. A flexi loan would allow the borrower to withdraw these 2 lakhs from the total loan amount of 10 lakhs. The interest will be charged only on the withdrawn amount, which can be repaid at any point during the loan's tenure.
The term 'flexi' stands for flexible. These loans aim to offer the benefits of a personal loan to borrowers at much more flexible terms. Stay with us as we discuss the complete details, such as the Flexi loan interest rate, eligibility, documentation and much more.
Some of the striking features of these loans are listed below:
Applicants satisfying the following criteria can easily apply for a flexible personal loan:
*Age Limit criterion differs for every lender
A borrower must keep the following documents handy while applying for a Flexi loan:
The flexi loan interest rate varies from bank to bank, and there is no standard rate of interest. The interest is charged monthly on the withdrawn amount until it is duly repaid. For instance, on a flexi loan of 10 lakhs, out of which, a borrower has withdrawn only 2 lakhs, the interest will be charged only on the withdrawn amount i.e 2 lakhs.
Here is a quick comparison between flexi loans and traditional personal loans.
| Basis | Flexi Loan | Traditional Personal Loan |
| Purpose | To take care of unforeseen financial requirements | To cater to a wide range of personal expenses |
| Loan Disbursement | A set limit of credit is disbursed out of which borrowers can withdraw as per their need | The entire amount is disbursed at once |
| Loan Usage | Multiple withdrawals and multiple repayments are allowed | The loan amount can be withdrawn only once |
| Interest Charges | Interest charged only on the used portion | Interest charged on the entire loan amount |
| EMIs | Greater flexibility while repaying interest as well as principal component of the loan | Fixed EMI plans consisting of interest as well as principal component |
| Prepayment Charges | No charge applicable | Prepayments are subject to additional charges |
| Overall savings | Higher savings | Comparatively Lower savings |
Flexi personal loan's interest treatment differentiates it from other loans. Firstly, the borrower is offered the flexibility to use only the necessary portion of the loan without worrying about the rest. Secondly, the interest is accrued only on this used amount while the rest of the loan goes interest-free. This, ultimately, results in better financial assistance and overall interest savings at the same time.
Moreover, multiple withdrawals and simultaneous repayments characterise these loans and create a revolving line of credit.
Pluto Money's expert team offers complete guidance to flexi loan borrowers. We match the financial standing of our customers with the best bank suitable for them to help secure the best deal. Call us at 1800 208 3344 to get instant approvals.