Life has a habit of surprising us, and all those surprises come with their own expenses. Whether it’s wedding or medical bills, a personal loan allows you to meet your financial obligations comfortably. Now, for some individuals who are already paying a personal loan, the question arises whether they should take a fresh personal loan or a top-up loan on their existing personal loan.
Both loans offer advantages and limitations. While a top-up personal loan may help you get lower interest rates, a fresh personal loan helps you get independent terms. In this blog, we will compare a top-up vs a new personal loan to help you choose the right financing option.
A top-up personal loan is an additional loan facility that is offered to existing personal loan borrowers who require additional funds on top of their loan. It allows you to borrow more money with the same lender (banks & NBFCs) without having to apply for a new loan. DMI Finance offers a top-up loan to its existing borrowers; they can check the offers on the DMI Finance app. Click here to check.
Both top-up personal loan and fresh loan offers have their own benefits. Here are the factors that you must consider when choosing between a fresh vs a top-up personal loan.
DMI Finance offers personal loans with no paperwork. Download the mobile app and apply now.
Here’s the process to apply for a DMI Finance personal loan:
Your application will be submitted for review, and you’ll be notified of approval within some minutes
Here is a summary of top-up vs new personal loan pricing that you must consider when applying for a top-up of a fresh loan:
Interest Rate Comparison
Processing Fees Structure
Top-up personal loans are usually processed with a processing fee and are processed within a shorter time period with less documentation. Fresh personal loans are charged with higher processing fees due to the full documentation and verification process.
Both new loans and top-up loans are subject to an 18% GST on processing fees. But the difference in the base processing fee will allow substantial savings on GST on top-up options.
Lenders generally have two tenure options when you borrow a top-up personal loan:
Top Up Personal Loan Tenure
New Personal Loan Tenure
The new personal loan offers complete freedom and flexibility when it comes to tenure choice. This allows you to choose the tenure based on current financial capacity rather than being constrained by existing loan timelines.
Here is a short overview of the difference between a top-up up vs new personal loan:
| Feature | Top Up Personal Loan | Fresh Personal Loan |
| Meaning | Additional loan over an existing personal loan | New loan that is entirely independent of the existing loans |
| Lender | Same lender | Same or different lender |
| Loan Amount | Percent of outstanding loan | Depends on income, credit score, eligibility |
| Interest Rate | Lower | Higher but negotiable |
| Processing Time | Faster because of less documentation | More documentation, longer processing time |
| Tenure | Aligns with existing loan | New tenure options |
| Documentation | Minimal | Complete documentation required |
| Influence on Credit Score | Influences credit score in a similar way | Influences credit score in a similar way |
Choosing between a top-up and a fresh personal loan depends on your current financial status, urgency and relationship with your existing lender. While top-up loans offer seamless and faster access to an amount, new loans offer a higher loan amount and better flexibility. To choose between the two, consider your financial circumstances and requirements.
At DMI Finance, we offer personal loans with favourable terms, no matter the situation. You can apply for a loan amount of up to ₹5 lakh. The entire process is digital, and no paperwork is required. Click here to apply for a personal loan.
1. How does a fresh personal loan vary from a top-up personal loan?
A top-up personal loan is when a lender approves an additional amount to borrowers on their existing personal loan. A fresh personal loan, on the other hand, is when you apply for a fresh personal loan.
2. How fast can I get approval for a top-up vs a new personal loan?
With DMI Finance, whether you are an existing borrower or a new customer, we provide approval for our top-up and fresh personal loans within minutes.
3. What are the personal loan top-up eligibility requirements?
You need an existing personal loan with a lender with at least 12 months of good EMI payments, fixed earnings, and the capacity to repay higher EMI instalments.
4. Can I increase the loan amount on my existing loan without impacting my credit score?
Yes, you can apply for a top-up loan with your current lender. This helps you get additional funds for your financial needs. When you apply for a loan, whether a top-up or a fresh loan, a hard bureau inquiry makes an impact on your credit score, but it is not substantial. Do not apply for various loans in a short period, as this can have a negative impact on your credit score.
5. Which is less expensive, a new personal loan or a top-up loan?
Top-up borrowing is usually more affordable as they are processed with lower fees, with favourable interest rates and no documentation fees. If you have built up your credit score, you can also apply for a fresh personal loan and get lower interest rates than your existing one.
6. Can I take a top-up loan from another lender?
No, you can only apply for top-up loans with your current lender. You can change the lender by transferring your personal loan, but you cannot apply for a top-up from another lender.
7. Do top-up loans have a longer tenure?
Top-up loans increase the tenure of your existing loan, but in most cases, not more than the original loan tenure.
8. Will I be able to take a top-up loan with a poor credit score?
A bad credit score makes it difficult to get a top-up loan.
