Can I use a top up loan for any purpose?

A top-up loan allows existing borrowers to obtain additional financing over and above their current loan amount. However, top-up loans come with certain restrictions regarding the use of the additional funds.

While the purpose of a top-up loan is flexible in most cases, lenders usually have some guidelines for permitted usage. Common eligible purposes for top-up loans include:

• Purchasing consumer durables like home appliances or electronic gadgets
• Funding home renovations or minor construction
• Financing a holiday or vacation
• Paying for higher education fees
• Meeting medical expenses
• Consolidating debt of high-interest loans
• Using as business capital or working capital

However, loan providers typically don't allow using top up loan amounts for risky purposes like speculative trading or investments, gambling or betting activities. Usage restrictions are as per regulatory norms and specific lender policies.

Applicants should check the stated purpose of the loan clause in their top-up loan agreement to confirm the permitted usage as per their lender. While top-up loans offer financing flexibility, certain usage limitations may apply.