The structure suits genuinely irregular needs — a renovation that bills in stages, working capital that breathes with the season. Watch two things: the flat annual "limit fee" some lenders charge on the whole sanctioned amount whether used or not, and the temptation of a permanently drawn limit, which quietly becomes an expensive loan with no fixed end date.
Before you borrow
- Compare the total payable, not the EMI — a longer tenure always looks cheaper monthly and costs more overall
- Check the processing fee, typically 1% to 3%, which is deducted before the money reaches you
- Ask whether prepayment is allowed and what it costs, since most personal loans are fixed rate
Run your numbers in the EMI calculator before you commit to anything.