Ashish Sapra

Individuals opt for loans to meet requirement or mitigate financial crisis arising due to various reasons. And a personal loan is the most convenient option to fulfill all financial requirements. Today, most of the financial institutions offer personal loans as a proposition that enables customers to meet their obligation for funds to address different needs.

A personal loan is a financial instrument that an individual can use for various purposes like, renovating a house or financing a family vacation, paying for a wedding or consolidating debts against one loan. It is the most effective type of loan that helps an individual when he or she needs to raise funds on an urgent basis. But the consumers look for more from one product to meet their exact needs. In such a scenario, a flexible personal loan is the best solution. A flexible personal loan is an additional feature that makes personal loans even more convenient and efficient for the individuals. Flexible loans are the kind of loans that allow customers to withdraw and deposit money in the loan account as per their convenience, without incurring any additional charges.

Flexible personal loans today come with several benefits. It is a kind of credit facility that allows a customer to withdraw and use an allotted specific amount of money for any financial requirements. It allows customers to use any amount within the assigned limit and pay interest on the amount withdrawn. Today, customers have the freedom to repay the loan amount in equated monthly instalment or only the interest on the amount availed, as EMI. Which means, the borrower can repay the entire principal amount at the end of the tenor. By choosing it, customers pay much lower EMIs every month and tackle unpredictable expenses in a much more efficient manner.

Flexible repayment option of flexible personal loans enables customers to focus on other vital issues of life as the requirements for finances can be met without needing to worry about the repayment date and instalment amount. Further, customers can reduce their principal balance in flexible loans by prepaying as per their cash flow which involves no charges. It also allows the customers to re-avail the prepaid amount in case they need it again.

Another advantage of flexible personal loans is that one can convert it to a term loan at any point in the defined tenor. So, if the customer realises halfway through the tenor that he may not be able to repay the principal sum in one go, he can convert it to a term loan and pay in monthly EMIs.

A regular personal loan allows an individual to borrow a fixed sum of money and pay interest on the total amount borrowed. Hence, for people with irregular incomes such as self-employed professionals or business entities, flexible loan is the best loan option as they can use the loan amount as required and pay interest only on the amount used. They can even prepay the loan when they have surplus disposable funds without any extra charges.

Though flexible personal loans have gained popularity amongst the young masses in the recent years, increased disposable income and higher standard of living across the country further creates a demand pool for it in the future. Currently, some players in the market offer flexible loans, and we are hopeful to see more entrants in the industry in the upcoming days.

(The writer is Senior Vice President, Consumer Business of Bajaj Finance)
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