Bajaj Flexi Loan: How AMC and Foreclosure Charges Actually Work
Most borrowers comparing personal loans focus on interest rate and EMI. With a Bajaj Flexi Loan, there are two additional cost components that do not apply to a standard term loan - an annual maintenance charge and a foreclosure calculation that works differently from what most people expect. Neither is hidden in the fine print, but both are easy to miss during the sales process.
This guide explains how both charges work so you can evaluate the product clearly.
What Is a Bajaj Flexi Loan
A Bajaj Flexi Loan is a revolving credit facility. Instead of receiving a fixed disbursement and repaying it in equal EMIs, you are sanctioned a credit limit and can withdraw from it as needed, repay, and withdraw again. Interest is charged only on the amount you have actually withdrawn, not on the full sanctioned limit. The EMI during the loan tenure typically covers interest only, with the principal repaid at the end or through voluntary part-payments.
Bajaj Finance offers this in two variants - Flexi Term (Dropline) Loan, where the available credit limit steps down over time, and Flexi Hybrid Term Loan, which combines an initial interest-only phase with a later amortising phase.
The Annual Maintenance Charge
A Flexi Loan account carries an Annual Maintenance Charge (AMC) levied once every year for the duration of the loan tenure. This charge is for the operational costs of maintaining the revolving facility - multiple withdrawals, part-prepayment without charge, and account servicing.
KharchaUdhar Insider Tip
The AMC is calculated on the Dropline Limit as per your repayment schedule on the date it is levied - not on your actual outstanding balance. If your sanctioned limit is Rs.10 lakh and your Dropline Limit at that point in the schedule is Rs.8 lakh, the AMC is applied to Rs.8 lakh. The exact AMC rate is specified in your loan agreement and can vary by borrower profile. Always ask for this figure in writing before accepting the loan offer.
From April 2023, Bajaj Finance adjusts the AMC from your unutilised Flexi Loan limit rather than debiting your bank account directly where limit is available. Where the available limit is insufficient, the amount is recovered via NACH from your registered bank account.
Since the AMC applies every year across the full loan tenure, a borrower on a 5-year Flexi Loan will pay this charge five times. Multiply the per-year AMC figure by the number of years remaining to understand the total additional cost beyond interest.
Standard term loans from any lender do not carry an AMC. This is a cost that is specific to revolving credit products.
How Foreclosure Is Calculated on a Flexi Loan
For a standard term loan, foreclosure charges are calculated on the outstanding principal balance at the time of closure. If you borrowed Rs.10 lakh and have repaid Rs.7 lakh, the charge applies to the remaining Rs.3 lakh.
For a Flexi Term (Dropline) Loan and Flexi Hybrid Term Loan, the foreclosure charge basis is different. Bajaj Finance charges up to 4.72% (inclusive of applicable taxes) of the total withdrawable amount as per the repayment schedule on the date of foreclosure - not your actual outstanding utilised balance.
KharchaUdhar Insider Tip
The withdrawable amount as per repayment schedule is the credit limit that your loan agreement says should be available to you at that point in the tenure - regardless of how much you have actually drawn. If you have a Rs.10 lakh Flexi Dropline Loan and have only used Rs.3 lakh, but the schedule shows Rs.8 lakh as the withdrawable limit at the time you foreclose, the charge is applied to Rs.8 lakh. Before deciding to foreclose, ask Bajaj Finance for a foreclosure statement that clearly shows the exact amount on which the charge is being applied.
The logic behind this is that the lender has ring-fenced the full limit for your use throughout the tenure, and the foreclosure charge compensates for the interest income that will not be earned on that limit. The RBI has not specifically prohibited this calculation method for revolving credit products, and it is disclosed in the Key Fact Statement (KFS) of the loan. That said, borrowers who have utilised only a portion of their limit and expect the charge to be calculated on actual outstanding principal can find this surprising.
For reference, Bajaj Finance’s own published page on personal loan foreclosure confirms that for Term Loans, the charge is on the outstanding principal, while for Flexi variants it is on the total withdrawable amount as per repayment schedule.
Comparing the Two Loan Types Side by Side
| Feature | Term Loan | Flexi Loan |
|---|---|---|
| Interest charged on | Full disbursed amount | Withdrawn amount only |
| Annual Maintenance Charge | None | Yes, every year |
| Part-prepayment charge | Up to 4.72% | None |
| Foreclosure charge basis | Outstanding principal | Withdrawable limit per schedule |
| EMI structure | Principal + interest | Interest only (principal at end or via part-payments) |
When a Flexi Loan Makes Sense
The product is well-suited to borrowers who have irregular cash flow and genuinely need to withdraw, repay, and re-draw across a multi-year period. If you use the revolving facility actively, the interest saving on unutilised portions can offset the AMC over time.
If you need a fixed lump sum and plan to repay it systematically, a standard term loan is straightforward to compare and exits cleanly. The AMC does not apply, and the foreclosure charge is calculated only on what you owe.
The most useful question to ask before accepting a Flexi Loan offer: what is the total AMC outgo across the full tenure, and what would the foreclosure charge be if you needed to close the loan in year two or three? Both figures are calculable upfront, and both should be factored into the total cost of borrowing alongside the interest rate.
Use the Personal Loan EMI Calculator to compare the effective cost of a term loan against the Flexi structure using your specific loan amount and tenure.
For a deeper look at how lenders calculate your eligibility and the charges that are often not discussed during the sales pitch, read how personal loan amount and interest rate is calculated.
This guide was written by practitioners who have worked on personal loan product design, credit policy, and underwriting at Indian banks and NBFCs. We write from the inside of the system - not from a generic content brief. Data, lender rates, and eligibility criteria are verified quarterly. If you spot an error or outdated figure, write to us.
Use our free tools to check your eligibility and calculate your EMI before you apply - no signup required.