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A flexi loan, also known as a flexi personal loan, is a type of loan offered by financial institutions that provides flexibility in borrowing and repaying funds. It allows borrowers to withdraw and repay funds within a predefined credit limit during the loan tenure. Understanding the key features and aspects of flexi loans is essential for making informed financial decisions.

1. How Flexi Loans Work

Credit Limit: The lender provides a predetermined credit limit to the borrower, based on their creditworthiness and other financial factors.

Withdrawals and Repayments: Borrowers can withdraw funds as needed from the available credit limit. Repayments can be made at any time, either partially or in full, without any penalties or charges.

Interest on Utilized Amount: Interest is charged only on the amount withdrawn, not on the entire credit limit. Interest is calculated based on the daily outstanding balance.

Loan Tenure: The loan tenure remains fixed, but the outstanding loan amount varies based on the withdrawals and repayments made during the tenure.

2. Key Components of Flexi Loans

Credit Limit: The maximum amount up to which the borrower can withdraw funds during the loan tenure.

Interest Rate: The rate at which interest is charged on the utilized amount, often varying among lenders and based on market conditions.

Loan Tenure: The overall duration within which the borrower must repay the utilized amount, often with the flexibility to make repayments at any time.

Repayment Options: Borrowers can make repayments at their convenience, and the EMIs are usually flexible, allowing them to pay only the interest or both interest and principal.

3. Benefits of Flexi Loans

Flexibility in Borrowing: Borrowers can withdraw funds as needed within the credit limit without reapplying for a new loan.

Cost-Effective Interest: Interest is charged only on the amount withdrawn, potentially resulting in lower overall interest costs compared to traditional loans.

Convenient Repayment: Repayments can be made at any time, allowing borrowers to manage their finances and reduce the outstanding loan amount.

Emergency Fund: The available credit limit can act as an emergency fund, providing financial security during unforeseen circumstances.