Flexi Loan Line of Credit India: How It Works
Flexi Loan and Line of Credit in India: How It Works and Who Should Use It
A flexi loan or line of credit is a revolving credit facility that works differently from a regular term loan. Instead of borrowing a fixed amount and paying EMIs on the full amount from day one, you get a pre-approved credit limit and pay interest only on what you actually use. This makes it much more cost-efficient for borrowers whose needs fluctuate.
Bajaj Finserv’s Flexi Personal Loan, IDFC First Bank’s Personal Overdraft, and MoneyTap’s Credit Line are among the most popular such products in India.
Overview of Flexi Loans in India
A flexi loan sets up a sanctioned credit limit (say Rs 5 lakh). You can withdraw any part of it as needed. Interest accrues only on the withdrawn amount and the number of days it is outstanding. You can repay and redraw multiple times within the tenure, giving it a credit card-like flexibility with personal loan interest rates.
Most flexi loan products in India offer credit limits from Rs 25,000 to Rs 25 lakh. Tenures range from 12 to 60 months. Under the RBI’s guidelines, flexi loans offered by NBFCs must disclose all charges and calculate interest on reducing balance.
Interest Rates
Flexi loan interest rates in India range from 11% to 24% per annum on the drawn amount. Some lenders also charge a small unused credit line fee.
| Lender | Interest Rate (p.a.) | Credit Limit |
|---|---|---|
| Bajaj Finserv Flexi Loan | 13% to 19% | Up to Rs 25 lakh |
| IDFC First Bank Overdraft | 10.99% onwards | Up to Rs 40 lakh |
| MoneyTap | 13% to 24% | Up to Rs 5 lakh |
| KreditBee Flexi | 16% to 28% | Up to Rs 4 lakh |
Eligibility Criteria
- Age between 21 and 60 years
- Salaried or self-employed with stable income
- Minimum monthly income of Rs 20,000 to Rs 25,000
- CIBIL score of 700 or above
- At least 6 months of job or business stability
Documents Required
- PAN card and Aadhaar card
- Last 3 months salary slips or bank statements
- Address proof
- Employment letter or business registration
Application Process
- Apply online through the lender app or website
- Complete eKYC and income document upload
- Credit limit is assigned based on your income and credit profile
- Set up your virtual account or overdraft account linked to your bank
- Withdraw funds as needed via the app or directly from the account
- Pay back the withdrawn amount at any time; the limit replenishes automatically
Frequently Asked Questions
Is a flexi loan cheaper than a regular personal loan?
It depends on how you use it. If you need the full amount from day one, a regular term loan is cheaper. If your requirement is sporadic or you repay quickly, the flexi structure saves significant interest because you only pay on what you use.
Does the credit limit reduce after each withdrawal?
Not permanently. After repayment, the limit is restored. This is the core feature that makes it a revolving credit product. Only the outstanding balance at any point attracts interest.
Can I convert a flexi loan to a term loan?
Many lenders offer the option to lock in a portion of the outstanding balance as a term loan with fixed EMIs if you need structured repayment. This is useful once your cash need becomes predictable.
How is interest calculated on a flexi loan?
Interest is calculated on a daily reducing balance method. So if you withdraw Rs 1 lakh on Day 1 and repay Rs 50,000 on Day 10, you pay interest on Rs 1 lakh for 10 days and on Rs 50,000 thereafter.
