Flexi personal loans vs. Term loans: Which one lowers your EMIs?
  • SUBSCRIBE
  • WHAT TOPICS ARE YOU INTERESTED IN?

    Step 1 of 3

    NEXT Skip

    HOW OFTEN WOULD YOU LIKE UPDATES ?

    Step 2 of 3

    EMAIL ID

    Step 3 of 3

Get The Latest Updates

SUBSCRIBE

Flexi personal loans vs. Term loans: Which one lowers your EMIs?

  • Highlights

  • Make unlimited withdrawals from your flexi loan limit

  • Prepay your flexi loan when you can, at no added cost

  • Pay interest only on what you use with flexi loans

  • Bajaj Finserv Flexi Personal Loan lowers your EMIs by up to 45%

Term loans and flexi personal loans, help you meet a variety of financial goals like marriage, education, home renovation, vacation and more. However, the two sources of finance differ from each other in terms of their nature, the usage of funds, the interest charged,

1. Nature of the loan

A term loan is generally extended by a lender for a particular period of time with an agreed-upon repayment schedule subject to a fixed interest rate. Flexi personal loans, allow you the flexibility to withdraw the amount you need from your approved loan limit, as many times you want, as and when a need arises. Here, you can also repay the loan as and when you have extra cash.

2. Purpose of the loan

Term loans are generally business loans, meant for small businesses to meet their working capital needs and other similar requirements. On the other hand, you can utilize a flexi personal loan to finance a wide range of needs, be it funding the annual family vacation or managing a big wedding expense.

Flexi Loan Explained

3. Interest charged

Term loans are mostly subject to a fixed rate of interest with interest being charged on the entire loan amount, whether the amount is used or not. However, unlike a rigid term loan that offers little room on the interest front, a flexi loan allows you to pay interest only on what you borrow and not on the total sanctioned limit. This brings down the EMIs, thereby aiding you to manage your finances with ease.
For instance, considering Rs.5 lakhs have been sanctioned but you end up utilizing only Rs.3 lakhs. In such a scenario, the payable interest will be charged only on the Rs.3 lakhs you’ve borrowed.

4. Option to pay only interest as EMIs

A flexi interest-only loan allows you to pay only the interest component of the loan as the EMI, and settle the principal amount at the end of the tenor. You can also pre-pay the principal, either in full or partially, whenever you have excess funds. Such a facility is not available when you avail a term loan.

5. EMI Amount

EMIs on a term loan are generally much higher than that of flexi personal loans. Let’s understand how with the help of an illustration.
Loan sanctioned = Rs.10 lakh
Amount used by the borrower = Rs.5 lakh
Rate of interest = 15%
Repayment tenor = 5 years
The below table compares your annual cash outflow (the total amount you pay towards your loan, on an annual basis), your annual savings (the yearly savings made on the interest of the loan)

Term Loan Flexi Loan Flexi Interest-Only Loan
EMI: Rs.23,790 EMI: Rs.13,550 EMI: Rs.7500
Annual Cash Outflow: Rs.2,85,480 Annual Cash Outflow: Rs.1,62,600 Annual Cash Outflow: Rs.90,000
Annual Savings: NIL Annual Savings: Rs.1,22,880 Annual Savings: Rs.1,95,480

A Bajaj Finserv Flexi Personal Loan can reduce your EMIs by up to 45%, helping you save more.

6. Accessibility

Term loans usually have a rigorous approval process that requires a great deal of documentation. However, a Flexi Personal Loan from Bajaj Finserv offers you instant approval on your loan with money credited to your bank account in 24 hours. You can apply for the loan online in a couple of minutes by furnishing just a few documents for your loan to be approved.

Pre-approved offers on Flexi Personal Loans from Bajaj Finserv make it further easy to avail finance with money in bank with 1-step verification. With your loan amount already being approved, you only need to avail it without the need to queue for lengthy applications or undergoing a long process of documentation. All you need to do share a few basic details about yourself and know your pre-approved offer.

Personal Loan Instant Approval

Please enter your first and last name
Please enter 10 digit mobile number
Please enter valid Office Email ID
Please select your employer name from list

How would you rate this article

 Please let us know why?

What did you dislike?

What did you dislike?

What did you like?

What did you like?

What did you like?