A top-up loan allows someone who has taken out a car loan to get an additional loan using their car as collateral if they are struggling to pay the monthly installment. There are a few benefits - the interest rate is lower than a personal loan and the additional funds can help the borrower fully pay off their remaining car loan balance. Banks like HDFC, Kotak, and Axis have different eligibility criteria for top-up loans, such as requiring a certain number of prior car loan installments to be paid on time and calculating the maximum top-up amount based on prior payments made. Overall, a top-up loan can help borrowers get more funding to pay off their car loan or purchase a new vehicle.

1. The person who have taken a car loan and finds difficult to pay the next EMI, can take an
extra loan from bank i.e cash against your car is called as top up loan.
This scheme has two benefits:
Get an additional loan at the rate of 14% (HDFC)
The car loan is 3-4 % cheaper than a personal loan (17-18%)
Top Up Loan Eligibility For HDFC Bank:
At least 12 to 18 EMIs of your car should be paid
EMI track record should be clean
Formula to Calculate Eligibility: EMI Amount x Tenure Paid x Multiplier
MathBehindThe Top Up Loan
HDFC
Loan Amount: Rs. 5,00,000

2. Tenure: 60
EMI: Rs. 11,000
Tenure Paid: 20
Total Amount Paid: Rs. 2,20,000
Remaining Amount to Close: Rs. 5,00,000 – Rs. 2,20,000 = Rs. 2,80,000
Top-up Amount Eligibility: 11,000 x 20 x 1.5 = Rs. 3,30,000
Total Loan Eligibility: 2,20,000 + Rs. 3,30,000 = Rs. 5,50,000
To understand the above concept, Let Tushar Jadhav has a running car loan from HDFC bank.
He has paid Rs. 2,20,000 to HDFC bank by paying 20 EMIs. Tushar required another Rs. 2,80,000
to close the loan. According to eligibility criteria, Tushar will get Rs. 3,30,000 of top-up loan.
HDFC will close his running loan by repaying Rs. 2,80,000 and also providing him an additional
loan of Rs. 3,30,000. Thus, Tushar will become a customer of HDFC and will have a total amount
of Rs. 5,50,000 loan on him. Though the process is lengthier, but the top-up loan can help him
to purchase his dream car as well as great additional loan.
For the process 1% fees are applied. If we calculate the interest rate it is nearly 14%.
Kotak Bank
The process is called as BTPT (Balance Transfer Plus Top-up)
Let Tushar have a running car loan from Kotak bank. He paid Between 12 EMIs – 17 EMIs, but
wants some amount to close the loan. So, according to the eligibility criteria of Kotak Bank,
Tushar will get an extra loan as a top-up loan and it will be equal to 25 EMIs. The table shows a
top-up loan you will get as per the Kotak Bank criteria.
Sr. No. EMIs Paid to Bank Top-up Loan Received From the Bank
1 Between 12 to 17 EMIs Get Top-up Loan Corresponding to 25 EMIs
2 Between 18 to 35 EMIs Get Top-up Loan Corresponding to 30 EMIs
3 From 36 EMIs & Above Get Top-up Loan Corresponding to 35 EMIs

3. For the process 1% fees are applied. If we calculate the interest rate it is nearly 17%.
Axis Bank
The process is called as Top-up Funding and it depends on the tenure.
The top-up loan criteria is different of this bank. Let Tushar has a running car loan from Axis
bank and the tenure to close the account is between 24-36 months. If Tushar has paid between
12EMIs – 17EMIs then he will get top-up loan 125% on the principal amount (total loan – total
EMIs paid) and if he had paid 18+ EMIs ten he will get top-up loan 150% on the principle
amount. The table shows top-up loan you will get as per the Axis Bank criteria.
Sr. No. Tenure Funding (125%) on Principal Amount Funding (150%) on Principal Amount
1 24 – 36 Months 12 to 17 EMIs 18 & Plus EMIs
2 37 – 48 Months 15 to 17 EMIs 18 & Plus EMIs
3 49 – 60 Months 18 to 20 EMIs 21 & Plus EMIs
4 Greater Than 60 Months 21 to 25 EMIs 26 & Plus EMIs
For the process 1% fees are applied. If we calculate the interest rate it is nearly 15%.
Note: Principal Amount = Loan Amount – Total EMIs Paid.
Also Read: Few Important Tips to Manage Car Loan
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