Top-Up Loan Vs. Personal Loan: Which Is Better for You?

Have you ever taken a loan but gone short of funds anyway? You’re not alone.

In 2025, 40%-45% of all personal loans sanctioned by banks in India were indeed top-up loans. So, many individuals feel the need for extra funds even after getting the loan amount they originally applied for.

But here’s the catch: while applying for extra funds, most are unclear whether they should go for a fresh personal loan or simply add a top-up to their existing one.  

So, in today’s blog, we’ll discuss personal loans vs top-up loans to help you decide which one’s right and when.  

What Is a Top-up Loan?

A top–up loan is the amount you borrow on top of your existing loan.

Suppose you apply for a personal loan of ₹10 lakhs and get the amount. But soon after, you feel the need for an extra ₹2 lakhs. So instead of applying for a fresh loan, you can apply for a top-up loan with the lender. It’s usually quicker and more convenient, and often works out cheaper.  

Features of a Top-Up Loan

• Amount Range - Varies from lender to lender, but typically falls between 20%-80% of the existing/outstanding loan amount
• Common Uses - Home renovation, debt consolidation, medical emergencies, etc.
• Eligibility Criteria - Existing loan’s status, repayment history, credit score, repayment capacity, etc.
• Interest Rate - Generally lower than the original loan
• Usage Flexibility & Purpose Restrictions - Generally flexible, can be used for any purpose unless the lender explicitly imposes restrictions

Need funds for an emergency? Try our Instant Loan App now! 

What Is a Personal Loan?

Did You Know? As of March 2025, it is the most popular loan product in India, with over 35% of total loans disbursed being personal loans.  

Why?

A personal loan is a type of unsecured loan (not backed by any collateral) that can be used for personal purposes, like shopping, travelling, etc.

Features of a Personal Loan

• Amount Range - Can be anywhere between ₹50,000 to ₹5 lakhs (or more)
• Common Uses - Shopping, travelling, medical expenses, utility bill payments, etc.
• Eligibility Criteria - Your age, monthly income, employment status, credit score, existing debt, etc.
• Interest Rate - Can be between 19% to 30% (or higher)
• Tenure Flexibility - Offers flexible tenures, usually ranging from 1–5 years
• Repayment Options - Fixed monthly EMIs, with most lenders also allowing part-prepayment or full foreclosure

Personal Loan vs Top-up Loan: Side-by-Side Comparison 

Now, here’s a quick summary of top-up loans vs personal loans and their key differences - 

The differences between a top-up loan and a personal loan sum up to this: a top-up loan is an add-on to your existing loan with faster processing and usually lower rates, while a personal loan is a fresh borrowing option open to anyone who meets the eligibility criteria.

Which One Should You Choose?

Both personal and top-up loans fit the bill when you need funds for general expenses. But each has its own advantages and implications, which is why you need to be careful before making the pick.  

So, here’s a quick checklist to help you decide which one’s right for you: personal loan or top-up loan -

1. Examine Your Scenario

If you already have a running loan with a clean EMI record, a top-up might be the smarter move. If you don’t have any active loans or need a big amount, go for a personal loan.

2. Think Strategically

If you want to save on interest costs and need the funds urgently, top-up loans can be a good option. But, if you need full freedom with lender choices and amount, a personal loan wins.  

3. Factor in Your Repayment Capacity

If your income comfortably supports another EMI alongside your current one, cool, top-up is fine. If you want a separate EMI that you can structure better, a personal loan gives more flexibility.

4. Consider the Impact on Your Credit Profile

A top-up usually has a softer impact because it’s linked to an existing loan with stable repayment. A personal loan is a fresh credit line, so it hits your report differently.

5. Seek Assistance from Your Lender

If you’re torn, just ask your lender. They’ll tell you exactly how much you qualify for, what the interest difference is, and which option fits your income and credit history best. Or, consider using a Personal Loan EMI Calculator.  

How to Apply for Personal and Top-up Loans in India?

Decided which loan you want? Here's how to apply -

• Check If You Qualify - Make sure you meet the lender's basic requirements, like age, income, credit score, and job type. For top-up loans, make sure you've passed the initial lock-in period and have a good payment history.
• Get Your Documents Ready - Have your KYC info, income proof, bank statements, and current loan details (for top-ups) on hand. This will speed things up.
• Use Loan Calculators - Before you apply, estimate your payments and loan amount with online calculators. This will help you find a payment you can afford.
• Apply Online - Most lenders, including Hero FinCorp, let you apply through their app or website. Upload your documents, complete the verification, and track your application online.
• Tips for Faster Approval - Have a good credit score, avoid applying for too many loans at once, and make sure your paperwork is accurate.

Take Charge: Pick the Right Loan and Borrow Smart

Picking between a personal loan and a top-up loan is simpler than it looks. If you already have a loan running and you’ve been paying on time, a top-up is usually the quickest way to get a little extra money without starting from scratch. But if you need a larger amount or just want your own separate loan, a personal loan is the cleaner option.

Just think about what you actually need right now and what you can repay without stressing later, that’s really all it comes down to.

Ready to take the next step? Apply for a personal loan with Hero FinCorp today! 

Frequently Asked Questions

1. Can I get a top-up loan without an existing home or personal loan?

No, you can’t get a top-up loan without an existing loan.

2. Is the interest rate on a top-up loan always lower than that of a personal loan?

Not always, but it’s generally lower because top-up loans are secured by existing collateral.

3. What happens if I switch lenders with an existing personal loan and want a top-up?

If you switch lenders, the new lender will clear your old loan and issue a new one. If you want a top-up, they’ll reassess your credit and income. If you qualify, you get the extra amount; if not, it’s just a balance transfer.

4. How fast is the disbursal process for personal loans vs top-up loans?

Top-up loans are disbursed within 1-3 business days. Personal loans can take longer, up to 7 days.

5. Does having a top-up loan impact my eligibility for a new personal loan?

A top-up loan increases your total debt liability. So, it negatively impacts your eligibility for a new loan.