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What is a Flexi Loan?

A flexi loan is a facility that is being offered increasingly by banks and other financial lenders. It is a cross between an overdraft facility and a personal loan. Flexi loans work by allowing you to borrow money and repay it at variable amounts at your choice depending entirely on how much you wish to repay at any particular time. If you cannot afford to pay back a large amount one month you can just pay back what you can afford. In another month if you have more money available you can pay back more. If necessary you cannot pay back anything in a particular month you can just withdraw money from the facility.

With a flexi loan a borrowing limit will be agreed by the lender and then you are free to spend, borrow and repay as you choose, but provided you stay within the limit on the amount of borrowing that is authorised.

Flexi loans are sometimes also called revolving credit agreements.

The useful thing with a flexi loan is the ability to spend within the credit limit and the corresponding ability to make regular payments or one off payments or a combination. There are no penalty charges for failing to make a payment one month or for repaying the entire loan in one lump sum if the money is available for that. Interest is typically calculated daily and then charged to the account at the end of each month.

Flexi loans really do share some of the financial characteristics of a credit card in the way that you can borrow and repay with real flexibility. This repayment flexibility can be very useful to the consumer and give them better control over their finance. One advantage of a flexi loan over a credit card is that they do not apply cash withdrawal fees, which are charged by the credit card companies.

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