Do you currently have a personal loan with a lender?
Financial management is not complete without loan management. You could be losing a lot of money if you’re not actively managing your debt and looking for the finest credit offers. Uncommonly used, a personal loan balance transfer can significantly reduce your interest payments.
We’ll go over all the information you require in this article.
What is a Personal Loan Balance Transfer?
A Personal Loan Instant Transfer occurs when a borrower transfers their outstanding loan amount to a different lender.
For example, Pritam borrowed Rs 1 lacs from Lender A at an interest rate of 12%. He paid back Rs 25,000 of the loan to Lender A. Then, he came across an offer from Lender B for Personal Loans at an interest rate of 9%. He decided to transfer his loan from Lender A to Lender B to take advantage of the lower interest rate.
Essentially, a Personal Loan balance transfer replaces your current lender with a new one. When you opt for a Personal Loan balance transfer, your new lender will pay the remaining money to your old lender, and then you repay the new lender.
In this process, you will need to incur certain additional charges such as the loan processing fee of the new lender and any penalties and charges that the old lender may charge for discontinuing their loan. However, the advantages of a Personal Loan balance transfer may outweigh these costs.
When Should You Opt for A Personal Loan Balance Transfer?
There can be several reasons for a Personal Loan balance transfer.
Lower Interest Rate
The most common reason for a Personal Loan bank transfer is to take advantage of a lower interest rate being offered by a different lender. Not all banks lend at the same interest rate.
Further, the interest rate for a Personal Loan can change from time to time. Hence, it is always advisable to keep looking for the best interest rate being offered in the market.
However, only borrow from credible organizations and banks and do not trust unknown lenders even if they offer a better rate.
Longer Tenure on Repayment of Loan
Sometimes, you need a longer period to pay off a loan. You may have miscalculated your budget, or your financial situation may have changed. In such circumstances, you can talk to your lender and ask them to extend the period of your loan. However, a lot of times, the lender may refuse to extend the tenure of your loan.
In such circumstances, you can find a different lender who is willing to take on the loan at a longer repayment tenure. You can apply to them for a loan transfer and avail of the longer tenure (and lower monthly payments).
Better Features
Some lenders offer better features when compared to other lenders. Suppose your old lender only operated through their branches and did not have net banking features. You would want to switch to a more modern lender. Hence, you can apply for a loan transfer to the new lender to take advantage of their features. Some of these features can include
- Waiver of last EMI
- Zero processing fees
- Payment through the mobile app
- Better customer support
- More credibility of the lender
Benefits of Personal Loan Balance Transfer
Lower Interest rate:
Opting for a Personal Loan Balance Transfer will provide you with the added advantage of a lower interest rate offered by another lender. With a lower rate of interest, you can reduce the EMIs and total cost of the loan.
Lower EMIs:
One of the primary reasons for opting for a Personal Loan Balance Transfer is lower EMI. The lower interest reduces the overall EMIs.
Loan Top-up:
Using a Personal Loan Balance Transfer, you help to get extra funds or additional funds on your existing funds. You can use the additional funds for meeting various financial requirements such as higher education, wedding, debt consolidation, home renovation, etc.
How to Get a Loan Transfer?
Getting a Personal Loan instant transfer is a simple process and can be accomplished within one week.
- The first step is to find a bank that you want to transfer the loan to (this can be for any of the reasons mentioned above such as lower interest rate, longer tenure, or better features.).
- Once you have found such a bank, calculate the cost of transferring the loan to the new lender. (You will need to consider the prepayment fee, the difference in interest rate, the processing fee of the new lender, etc.) If the cost seems feasible to you, you can proceed with the loan transfer.
- Apply to your current lender for a NOC (No-Objection Certificate) and a foreclosure letter.
- Apply to your new lender for a new loan and disclose your previous loan and previous payments.
- Receive sanction letter and disbursement from the new lender and repay the loan with the existing lender.
- That’s all. You have successfully made a Personal Loan balance transfer.
Eligibility Criteria for Loan Transfer
- Different lenders have different eligibility criteria, but most of them are similar. The list below is indicative and not exhaustive.
- The age of the borrower should be at least 22 years at the time of borrowing and not more than 58 years at the time of maturity.
- The applicant must be a citizen of India (if you’re borrowing from an Indian lender).
- The applicant must have a full-time job with a public or private entity or an LLP.
- The applicant must have work experience of at least one year and a stable income for at least 2 months with the current employer.
- The applicant must have a monthly income of at least Rs 20,000.
- Documents Required for a Loan Transfer
Here is an indicative list of the documents that you may need for a Personal Loan instant transfer:
- Know Your Customer (KYC) documents such as Aadhar Card or PAN Card
- Address Proof such as passport, utility bills, or rent agreement
- Income Proof such as salary slips or bank account statements
- Employment Proof such as employment certificate along with degree certificate for professionals
Wrapping Up
Opting for a Personal Loan balance transfer can be a good idea under several circumstances including a lower interest rate or longer repayment tenure. The process of availing of one is quite simple, and all you need to do is get in touch with your current lender to get started. Visit Credit success to avail best offers and check your eligibility for the same.
