Top Up Loan Eligibility, Types and Interest Rate

By Anupama Deshpande | Dec 17, 2022

A top-up loan is a loan given by the bank over and above your existing loan. The existing loan could either be a home loan, a personal loan, or any other form of loan. One can opt for a Top-up loan if he already has an existing personal loan and needs additional funds. You can make use of these funds for any purpose such as for personal use, for business use, for home or for any other miscellaneous expenses. As the bank already is acquainted with your profile under your existing loan, your Top-up loan amount is approved and disbursed easily and quickly upon meeting some simple eligibility requirements.

A top-up loan is suited for any emergency situation as it can be obtained quickly and with very less number of documentation requirement because you have already submitted all the required documents at the time of applying for the primary loan (existing loan).

Eligibility Criterion for Obtaining a Top-Up Loan

  • Top-up Loan can be taken only if you have an already existing loan
  • Top-up Loan is available only after a certain stipulated time has passed after availing your primary loan
  • One should have paid up a stipulated number of EMIs on his existing loan for being eligible for Top-up loan
  • There should not be any overdue EMI or missed EMI payments on your existing loan which means that you should have been no EMI bounce previously
  • You must have a good credit score

Features of Top-up Loan

  • You need to have an already existing loan
  • Simple repayments can be made using EMIs
  • Payment of a stipulated number of EMIs on your already existing loan
  • One can use this loan for meeting out any expenses
  • The tenure of Top-up loan cannot exceed the tenure of the primary loan (i.e. existing loan)
  • Attractive interest rates

Benefits of Top-up Loan

  • Top-up Loan can be availed with minimum documentation as there is not need to go through the hassle of fresh documentation
  • Top-up Loan is processed very quickly
  • Top-up loans have lower processing charges
  • Thre is no restriction on usage of funds obtained under Top-up loan
  • Loan has a fast disbursal so that you can use the money swiftly
  • Top-up loan carries a lower rate of interest than a fresh loan

Types of Top-up Loan

(1) Top-up Home Loan

Top-up Home Loan is an additional loan provided by bank which is over and above the existing Home loan. It is offered with minimal new documentation. It is a convenient way to raise money you need. It will be useful for building, furnishing, or renovating your home.

(2) Top-up Personal Loan

Top-up Personal Loan is an additional loan offered over and above the existing Personal loan.

(3) Top-up Car Loan

Top-up Car Loan is an additional loan offered over and above the existing Car loan. For applying for Top-up Car Loan, the borrower should have a clean payment record usually for atleast 12 months on the primary car loan.

(4) Top-up Business Loan

Top-up business loan is an additional loan offered over and above the existing business loan. There is no restriction on usage of top-up loan amount.

Documents Required under Top-up Loan

Minimal or no documentation is required to avail a top-up loan as you already have an existing loan with the bank. Many banks also offer pre-approved Top-up loan to their existing borrowers which is available very instantly.

Tenure of Top-up Loan

Top-up loan tenure can be ranging between 12 to 60 months but cannot exceed the outstanding tenure of your existing loan. Banks offer the facility to make repayment of top-up loan upto the outstanding tenure your primary loan. It has flexible repayment options and you can choose any of the repayment options.

Fees and Other Charges related to Top-up Loan

Lenders charge very nominal processing fees and charges for giving Top-up Loan. Such fees and charges are already made known by the lender to the borrowers at the beginning of their loan. The interest rate charged on Top-up Loan usually remains same as that of your originally approved existing loan. However, final interest rate on your top-up loan may vary depending on your credit profile.

Loan Amount under Top-up Loan

Top-up loan amount varies from bank to bank. This is to be kept in mind before opting for a top-up loan that the quantum of top-up loan cannot exceed the overall loan amount eligibility of the borrower after factoring in his outstanding loan amount.

Top-up Loan on Balance Transfer

Some of the bank also offer top-up loan on balance transfer i.e. transferring your existing loan with one bank to another bank. This facility of getting Top-up Loan on Balance Transfer is suitable to those borrowers who are unable to avail top-up personal loans from their existing bank or whose loan interest rate is higher.

Top-up Loan Vs New Loan

While selecting between Top-up Loan and New Loan, you must consider the interest rate on top-up loan and new loan. Usually, top-up loan interest rate will be equalent to that of a existing loan. If the rate on top-up loan is lower than that of new loan, you must grab the top-up loan offer. You can also negotiate with your bank based on a solid repayment track and a good credit score to get the top-up loan at lower interest rate. If it interest rate on top-up loan is higher then you can go for a new loan.

Further, you need to consider loan repayment tenure as well while selecting between Top-up Loan and New Loan. You should select the one which meets out your objective behind taking the laon.

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About Anupama Deshpande
Anupama is a Co-Founder of She is an MBA (Finance) and Chartered Financial Analyst (CFA). She also carries a Fellowship degree in Life Insurance Sector and is a Master of Computer Application (MCA). She is an expert in Finance Field with an experience of over 18 years on different managerial positions in finance industry including Stock Market, Depository and Mutual Fund Sectors. Apart from that she has remained for few years in the field of marketing as well. Her suggestions and advice for investments have been very useful to many people.
Her vast interest & expertise in the field of finance have encouraged her to write the articles so that others can also get benefitted out of them. She never loses any opportunity to learn and be creative. She is a valuable asset for & important resource to all those around her.