A personal loan comes with many benefits and can prove to be a stress-relief in case of financial emergencies. If you have already sourced one and are now faced with a sudden large expense need like a marriage, you have two options:

  1. A top-up loan or 
  2. A new personal loan

A top-up loan is offered by an existing lender, whereas, a new personal loan can be sourced from both existing and new lenders. If you are already paying the EMIs towards a personal loan, you can go for an option that will keep the payment obligations to a minimum. 

So, should you go for a top-up on a personal loan? Read on to find an answer and all other information you need to know about top-up loans.

What is a Top-up Loan?

A top-up loan is an additional loan amount which can be availed on an existing personal loan. You may be eligible to apply for a top-up loan if you have been making regular loan repayments on an existing personal loan. You can apply for a top-up personal loan with the same bank or a different bank by doing a balance transfer. The rate of Interest on top-up loans is normally around 0.25–1% higher than existing loan rates. 

Top up interest rates on personal loans are generally in the range of 9.85% to 23%. Top up loan personal loan can be easily availed from leading banks such as Axis Bank, HDFC, SBI etc since these offer loans at the comparatively lower interest rate of 6.9%.

When Should I Take a Top-Up Loan?

You can borrow a top-up loan if,

  • You require urgent funds for meeting your financial obligations.
  • You need immediate funds for business expansion, vacation, marriage expenses, etc.
  • You prefer to use loans of long tenure at low-interest rates.
  • You have an existing personal loan on which you have already paid a certain number of EMIs.
  • You want a loan which requires minimal to no documentation.

Factors to Consider while Taking a Call on Top-Up Loans

While borrowing any kind of loan, you must always take a rational decision by looking at your present situation and considering your financial future. To aid you through the decision-making process, we have shared certain key parameters which can help in evaluating a top-up loan and a new personal loan.

  • Rate of Interest - The interest rates on top-up loans is similar to personal loans. If you find a lower rate than what is offered in the open market, you should make the most of the offer. Else, you must negotiate with the existing lender for bringing the rate down to the desired rate. If this does not work out, you can opt for a fresh personal loan to minimise your monthly EMI obligations. If you are looking to take complete advantage, the interest rate should be a minimum of 2%-4% below the existing rate. This will minimise your EMI and interest obligations.
  • Tenure - Top-up loans are valid up to the time that the existing personal loan is valid. Thus, if you’re considering a top-up loan after 2 years from the start of the existing personal loan, which is for 5 years, the total loan (top-up + existing personal loan) will continue till three years. This may increase your EMI obligation further and it may invite further adjustment in your daily financial routine. 

For instance, if you had taken a personal loan of Rs. 5 lakhs at a 12% interest rate with a loan tenure of 5 years, the net outstanding balance will be Rs. 3,34,862 at the end of 2 years. The EMI obligation should be around Rs. 11,122. If you now apply for a top-up loan of Rs. 1,00,000, the total loan amount will be Rs. 4,34,862. Hence, the new EMI will rise to Rs. 14,444. 

To meet the commitment of an increased EMI, it is natural that the income will have to be higher from the time you first sourced the loan and ensure that all the expenses are under control. In case you haven’t had a raise in your income over the past 2 years, it makes sense to go for a fresh personal loan at reasonable rates and additional loan tenure in place of a top-up loan.

Interest Rates on Top-up Personal Loans at Leading Banks


Interest Rates on Personal Loan Top-up

SBI Top up loan

9.6% - 16.4%

HDFC Top up loan

10.5% - 22%

ICICI Top up loan

10.75% - 22%

Axis Bank Top up Loan

10.49% - 16.75%



  1. Should I take a top-up loan on my existing personal loan?

You can take a top-up loan on a personal loan by considering all the factors involved. It makes sense to borrow it only when you need the finances. This is because the top-up personal loan can be costly and you may end up paying extra interest through repayment.

  1. What are the benefits of a top-up loan?

One of the major benefits of a top-up loan is that it is usually available at low-interest rates as compared to a new personal loan. Personal loan interest rates may vary between 11-24%, however, top-up loan interest rates are similar to home loan interest rates.

  1. Can I use a top-up loan on my existing personal loan?

Yes, you can opt for a top-up loan on an existing personal loan if you are in urgent need of finances. 

  1. Will a top-up loan affect my credit score?

Top-up loans are available on personal loans but, depending on the lender you choose, you may get competitive interest rates. However, a top-up loan does not affect your credit score unless you delay loan repayment.

Final Thoughts

It is possible to negotiate for a better interest rate on a top-up personal loan based on a strong repayment track record and a good credit score. If you have been servicing the personal loan for some time, make sure that all the dues are paid on time. This will help in maintaining a good credit score of 700 or above. Lenders will generally agree to your interest rate terms if you have a good credit record.