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A loan balance transfer involves transferring the outstanding balance loan amount on your existing loan from one financial institution to another. The basic concept is that you ‘refinance’ your existing loan by paying off its outstanding balance by availing a new loan. This new loan can be taken from the same or a new loan provider.
Since a personal loan can be availed instantly and with significantly less hassles as compared to any other loan type, most people opt for this facility. However, the interest rates offered by different banks and non-banking financial institutes (NBFCs) vary from each other. If you feel that the interest rates on your existing personal loan are making you pay higher EMIs (Equated Monthly Installments) as compared to what other banks or NBFCs are offering, you can avail the personal loan balance transfer facility to transfer your loan to another loan provider.
Why opt for Personal Loan Balance Transfer facility?
Low-interest rates
The basic idea behind opting for a personal loan balance transfer is to reduce the burden on your EMIs with more affordable interest rates. For instance, suppose you have availed a personal loan of INR 20,000,00 at an interest rate of 14% for a 60-month tenure. You will have to pay approximately INR 2,762,501 as the total repayment amount (principal + interest), for which you will be paying INR 23,014 as your monthly installment for the entire loan tenure. Now, suppose you have already paid some EMI installments and the outstanding balance stands at INR 10,000,00. The interest rates on your existing loan remains the same. However, suppose you find another loan provider that is offering personal loan at a lower interest rate, say 12.5%. Thus, if you transfer your entire outstanding loan balance of INR. 10,000,00 to this new loan provider, you will be paying much lower interest rates and the EMI amount will also significantly come down.
Extended loan tenure
Another major advantage of availing a personal loan balance transfer facility is that, along with the interest rates, you can also choose the length of loan tenure for your new loan. For instance, in the above example, you would have had to pay the outstanding balance of INR 10,000,00 over the next 30 months on your existing loan. However, by taking a new loan, you can start fresh and extend the loan tenure as per your convenience.
Better features
Some loan providers offer better features on their personal loan facility. If you have a decent credit history and positively changing income dynamic, you can ask for benefits such as zero processing fees, waiver on your last EMI, lower interest rates, etc.
Top-up Loan Facility
Several financial institutes offer a top-up loan facility along with a personal loan balance transfer. The facility allows you to borrow additional funds over your required loan amount.
Better customer service
People also opt for transferring their loan balance in case they are dissatisfied with the customer service of their existing personal loan provider. If you feel like your loan provider is not assisting in solving your queries, is not providing proper EMI payment statements, or is in-general non-cooperative, you can transfer your loan balance to a new provider that offers much better customer services.
Eligibility for Personal Loan Balance Transfer
The eligibility for a personal loan balance transfer primarily depends on the borrower’s repayment capacity and past credit history. Some banks or NBFCs provide online eligibility calculators for their personal loans. Although the eligibility criteria may slightly differ for all of them, some of the basic parameters remains the same. These include-
· The outstanding loan amount must not be less than INR. 50,000 to transfer the personal loan
· A minimum of 10-12 EMI has to be paid before transferring the loan
· Past credit history should not show any default on your EMI payment
Documents required for Personal Loan Balance Transfer
The following documents are required to initiate a personal loan balance transfer
· NOC from previous loan provider
· Foreclosure letter on your existing personal loan
· EMI statements from your past loan provider
· Duly filled application form (physically submitted or online application)
· Identity Proof (Aadhar card, PAN card, Voter ID card)
· Address Proof (Driving License, Passport, electricity bill, telephone bill)
· Income proof (Bank statements, Passbook copy, salary slips, etc.)
Personal Loan Balance Transfer Procedure
Step 1: Compare the interest rate offered between your existing and new personal loan providers. Make sure you take into account the processing fees, loan prepayment penalty and other such charges to ensure that you are indeed financially benefiting from transferring your personal loan.
Step 2: Use the online EMI calculator as well as the Eligibility calculator to estimate how much amount you can borrow to refinance your existing personal loan
Step 3: Apply online for a balance transfer
Step 4: Submit the necessary documents for initiating the transfer
Step 5: Request for the amount disbursal by way of a cheque or demand draft (DD) in the name of your old personal loan provider.
Step 6: On receiving the outstanding balance, your old loan provider will cancel all the ECS and close your account.
Things to Keep In Mind
· Personal Loan Balance Transfer Fees and Charges
Sometimes, banks may charge processing fees, legal foreclosure charges or valuation charges to initiate the loan balance transfer. Make sure you consider these charges while analyzing the benefit of availing a personal loan balance transfer facility.
· Terms and Condition
It is important that you read all the terms and condition on your balance transfer before signing on the dotted line. Make sure there are no discrepancies in the contract or any hidden charges involved while availing the facility.
· Need for collateral
Generally, personal loans are unsecured loans. They do not require any collateral. However, some financial institutes demand a form of security against granting a loan. Make sure you have absolute clarity on this matter with your new loan provider.
If you wish to borrow a personal loan, get in touch with us at Finserv Markets. Apply today and get the loan amount disbursed in your account within 24 hours. Bajaj Finserv Personal loan at Finserv Markets come with attractive features such as instant approval, flexible repayment options and zero limits on cash withdrawals.
Finserv Markets, from the house of Bajaj Finserv is an exclusive online supermarket for all your personal and financial needs. Loans, Insurance, Investment and exclusive EMI store, all under one roof- anytime, anywhere!
