Difference Between Hybrid Flexi Loan and Personal Loans
In the personal loan category, there are two types of loan offerings by the lenders- one is the regular personal loan and the other is the hybrid Flexi loan.
Although both fall under the same loan category, they are designed differently to address the specific needs of the borrowers. In this blog article, we will compare both the loan types and check which is better for you- a hybrid flexi loan or a personal loan. Please keep in mind that while both have their merits, each product is best suited to an applicant based on several factors including their requirement, profile, eligibility, preference, and more.
Comparison Point of Hybrid Flexi Loan vs Personal Loan:
Here is the comparison between hybrid flexi loan and regular personal loan.
1. Meaning and Nature of Loan
A personal loan is an unsecured form of loan offered by financial institutions to users based on their loan eligibility. Once the personal loan application gets the final approval (sanction), the required funds are disbursed to the borrower’s bank account.
Whereas, a hybrid Flexi loan is a type of revolving credit, where the borrower receives the loan for a fixed limit. The borrower can withdraw funds against the loan limit as and when required. Furthermore, the borrower has the flexibility to pay off the loan as per convenience and repayment capacity. Interest is only charged for the amount utilized and for the period until it is repaid.
2. Loan Tenor and Repayment
Both, personal loan and hybrid flexi loan have fixed repayment tenure during which the entire loan amount along with interest needs to be repaid. However, the repayment terms differ.
In a personal loan, there is a fixed amount that needs to be repaid every month during the loan tenure. Whereas, in a hybrid flexi loan, the borrowers get the flexibility to choose the repayment sum and frequency, but need to ensure the borrowed sum is repaid before the end of the loan tenure.
3. Interest Rate
The personal loan interest rate is charged on the entire loan amount, irrespective of whether the funds are used or not. The rates are charged annually and are usually much lower than other forms of unsecured credit.
In a hybrid flexi loan, the interest rate is charged on the amount that is used, not on the approved loan limit. The very feature makes hybrid flexi loan affordable, as the borrower doesn’t need to pay interest on unused money. On the other hand, the interest rate charged is usually very high, because, unlike a personal loan, it may be charged on a monthly/weekly/daily basis.
On the other hand, personal loan interest rates are usually charged on an annual basis. By using the personal loan EMI calculator, one can plan their repayments effectively and greatly reduce the overall interest cost on the loan amount.
4. Loan Disbursal Process
In a personal loan, the loan disbursal process is very simple and straightforward. Once the loan application is approved by the lender, the required funds are directly credited to the borrower’s registered bank account.
Whereas, in the case of hybrid Flexi loans, the approved loan limit is disbursed to a specific account. The borrower gets full access to the loan account and can withdraw funds as and when needed. Continue reading to know more about this.
5. Accessibility
In terms of accessibility, the approval process of a personal loan is not very stringent, especially when it comes to NBFCs like Fullerton India. Personal loan requirements are simple. Individuals who have a credit score of 750 or higher, with good repayment history, stable employment and have a debt to income ratio of less than 40% are highly likely to get approved for a personal loan. You can use our personal loan eligibility calculator to get an estimate of the maximum amount you may be able to get.
Whereas, hybrid Flexi loans have more stringent eligibility criteria compared to a personal loan. These loans are usually available only to salaried individuals with excellent credit scores and extremely high-income levels. Others may be able to get this facility at very high-interest rates. Please note that at this moment, Fullerton India does not offer hybrid Flexi loans.
6. Application Procedure
The application procedure for both loan types is somewhat similar. The lender carries out all the necessary due diligence of the borrower’s profile before approving the loan amount.
Compared to an in-person visit to a branch, the online personal loan application process is much faster and hassle-free.
Documentation Required for Personal Loan and Hybrid Flexi Loan
For both the loan types, users can refer to the personal loan documentation of the lender. The following documents are the basic ones required to avail of any of the loan types:
- PAN Card
- Proof of Residence (AADHAR, Utility Bill)
- Past 6 months bank statement
- Last 3 months' salary slip (for personal loans, self-employed individuals need to submit proof of income)
- Form-16 or Income Tax Return
- Cash salary applicants are usually not accepted (in case of salaried)
If you are self-employed, you need to furnish all the financial documents of your business. Also, depending on your profile and the lender’s policy, additional documents may be requested.
Hybrid Flexi Loan or Personal Loan: Which One Should You Take?
The choice of loan type entirely depends on your requirement. If your requirement is spread over time and you don’t need the funds all at once, then a hybrid Flexi loan is a more suitable option for you. It will help you to reduce the interest cost and give you more flexibility.
On the other hand, if you need a large amount of money for a specific purpose, and wish to have flexible repayment terms and low-interest rates, a personal loan would be a better choice. Fullerton India offers personal loans up to INR 25 lakhs* at attractive interest rates and flexible repayment tenures between 12 to 60 months.
You may use the personal loan EMI calculator to check which loan option is more affordable and best suits your requirement.
*Terms and conditions apply.