Should you take a top-up loan on your existing personal loan?

I'm repaying a personal loan, but due to recent unexpected expenses, I find myself needing additional funds. I've an option to take a top-up loan on my existing personal loan, but I'm not sure if it's a better route compared to a fresh loan.

- Akash Bararia

Could you explain how a top-up loan works, what are the pros and cons, and what factors should I really consider before deciding to go ahead with it?

—Name withheld on request

A top-up loan on an existing personal loan can be a convenient way to access additional funds without going through the process of applying for a new loan. It allows borrowers to utilize their existing loan relationship with the lender to avail of extra credit. However, before opting for top-up loans, several factors need to be considered:

Key considerations

Increased loan burden: A top-up loan adds to your existing debt, which means your monthly payments will be higher. It's important to check if you can comfortably afford the extra repayment before taking the loan.