A flexi loan, also known as a personal line of credit or overdraft facility, is a type of loan that provides borrowers with quick access to money as and when required, up to a sanctioned limit. Financial institutions provide this loan facility to eligible salaried individuals and business owners.
With a flexi loan, you only need to pay interest on the amount withdrawn, making it a convenient and affordable borrowing option. This article provides an overview of flexi loans, their key features, eligibility criteria, application process, interest rates, and repayment terms.
Flexi Loans: An Overview
A flexi personal loan offers an ongoing credit facility where loan providers allocate a specific amount as your approved loan limit. You can withdraw money from this amount as per your needs, similar to a credit card. The unused approved amount continues to be available for future withdrawals.
It acts as a backup source to meet urgent or additional funding needs. You only start accruing interest costs on withdrawals made. There is greater flexibility in managing cash flow requirements without needing loan approval every time.
Key Features of Flexi Loans
● Limit: Credit facility with pre-approved loan limit.
● Withdrawal: Withdraw money from the sanctioned amount as required.
● Interest: Only pay interest on the amount withdrawn; the unused limit has no charges.
● Repayment: Repay money withdrawn in equated monthly instalments (EMIs) or lump sum payments whenever convenient.
● Renewable loan facility: Repay and redraw money from the approved limit.
Who is Eligible for Availing a Flexi Loan?
Salaried individuals and self-employed professionals can avail flexi loans if they meet the eligibility criteria:
Salaried Individuals:
● Minimum age of 18-21 years
● Work experience of at least 2 years
● The net monthly income required is usually above ₹20,000
Self-employed Professionals:
● Minimum business vintage of 3 years
● Profit-making business
● May require annual business turnover in a certain bracket, say above ₹10 lakhs or so.
How Can I Apply for a Flexi Loan?
Many banks and non-banking financial companies (NBFCs) offer flexi personal loans in India. You can check the flexi personal loan interest rates and apply through either of these two channels:
1. Online Application: Visit the lender’s website and apply online by filling in the application form. Upload required documents.
2. Branch Visit: Walk into the nearest branch office and meet the loan specialist. Submit a duly filled application form and documents.
As part of the fast and paperless processing, lending companies disburse approved flexi business loan amounts directly into the applicant’s bank account within a few hours or a few working days.
What Are the Flexi Loan Interest Rate and Charges?
Interest rates on flexi personal loans start at 1% per month and are paid monthly only on the amount withdrawn. An approximate 1-2% processing fee and GST may be charged on the loan limit sanctioned. Typically, there are no charges for prepayment or foreclosure of outstanding’s; however, you must confirm this with the loan provider. Additional charges apply for late EMI payments, cheque bouncing, or loan request modification during the loan term.
Documents Needed for Flexi Loan Application
Salaried Applicants:
● Identity Proof (Aadhaar Card / Voter ID / Passport)
● Residence Proof
● Last 3 Months’ Salary Slips
● Bank Statements of 6 Months
● Form 16 (if applicable)
Self-employed Applicants:
● Business Vintage Proof
● Identity & Residence Proof
● Last 6 Months' Bank Statements
● Income tax returns (ITRs) of the Last 3 Years
● Proof of Business Address
How Does the Repayment Structure Work?
Flexi loans allow great flexibility in managing your repayment structure. You can choose between these repayment options:
● Interest: Pay interest only every month or quarter on the amount withdrawn
● Partial Payment: Make partial repayments of principal along with interest payments
● Lumpsum Payment: Repay the entire outstanding loan amount at the end of the loan tenure
● Foreclosure Charges: Foreclose and exit the loan anytime without prepayment charges
The repayment period can range from 1 to 5 years. Some financial institutions also offer a top-up loan facility to increase your existing credit limit, if required. By making timely repayments, you can easily maintain your credit score and fulfil urgent funding needs through flexi loans.
Conclusion
Flexi loans function from reputed financial institutions function as a continuous credit facility available for utilization as needed to meet personal or business financial requirements. Their key advantages are quick approval, competitive rates, easy application process and flexible repayment choices. By understanding the features well, you can determine if availing a flexi personal loan would be the right financing decision for your needs.
FAQs
How do Flexi loans work?
Flexi loans work like a credit facility where you get access to a pre-approved loan limit. You can make multiple withdrawals from this limit and only pay interest on the amount you have withdrawn, not the full sanctioned amount. It's a revolving facility allowing convenient cash flow management.
What is a FlexiPay loan?
A FlexiPay loan allows borrowers to pay only interest every month on the loan amount withdrawn. You can choose to pay partial or full principal whenever convenient before the loan tenure ends. This helps in managing monthly outflows better.
What is meant by a flexi-term loan?
A flexi term loan is one where the borrower can customise the repayment tenure as per their choice and projected cash flows. You can repay the loan early without any charges or extend the tenure by paying a small processing fee.
Who is eligible for a flexi loan?
Salaried employees and self-employed individuals with a steady income source and adequate credit history can apply for flexi loans. The minimum age is usually between 18 and 21, and the minimum work experience for salaried employees is 2 years, and the minimum business experience for self-employed individuals is 3 years.
Is FlexiPay good or bad?
FlexiPay loans can be suitable for borrowers who have fluctuating monthly incomes. Paying only interest on withdrawals provides easier liquidity management. However, you need financial discipline to ensure you repay the actual loan amounts within the approved tenure.
What happens if I don't pay my Flexi loan?
If you miss your Flexi loan Equated Monthly Instalments (EMIs), additional late payment charges will apply. It also negatively impacts your credit score. After 60 days of payment default, lenders can initiate recovery actions including legal proceedings against borrowers.
How do I repay my Flexi loan?
You have the flexibility to pay interest-only monthly or opt for part or full principal repayment along with interest. You can repay lump sum amounts before tenure closure to minimise outflows. No pre-closure or foreclosure charges are applicable.
Can you withdraw from a Flexi loan?
Yes, a flexi loan allows multiple withdrawals and redraws up to your overall sanctioned credit limit. To make fresh withdrawals, you simply need to have an available balance from previous loan repayments.