Personal Loan Balance Transfer

A balance transfer is a process where you transfer the existing personal loan from one lender to another. If you have an outstanding loan and it has a high interest rate on personal loan, you can transfer it and enjoy a lower interest rate. This means you can reduce the burden of EMI payment.

Features of Personal Loan Balance Transfer

There are numerous reasons to get a Balance transfer on your personal loan.

  • Better Rate of Interest on Loan

Low-interest rates reduce the borrower's interest burden through reduced EMIs. It is always better to access the need, evaluate the offer and compare the interest rates and other features before making a final decision with the balance transfer facility.

  • Longer Loan Tenure

When you transfer a personal loan you can potentially negotiate the tenure of the loan and get the repayment tenure of the loan extended as per your requirements. With an extended loan tenure, you can have the lower monthly burden of EMI but have a higher total interest payout.

  • Top-up Loan Facility

Most banks offer a top-up loan facility along with personal loan transfer. In case, if you need more credit, you can consider going for a personal loan balance transfer at a lower rate of interest. In the case of top-up loans, the outstanding loan balance is directly paid to your previous lender and the fresh amount of loan gets credited to your account.

  • Better Personal Loan Features

Depending on your credit history, you may get an offer from other lenders offering better features on personal loans such as waiver of last EMI, zero processing fees, lower interest rates, etc. The personal loan balance transfer facility can thus not only reduce your personal loan interest burden, but you might also get a loan with better features.

  • Dissatisfied with your current loan provider’s services

If you're not happy with your current loan service provider. You can simply opt for a personal loan transfer and choose to go with a lender who can provide better services as compared to the current one.

Personal Loan Balance Transfer Eligibility Criteria

The main objective of a personal loan balance transfer is to reduce the overall burden of debt. This concept was first introduced with credit card balance transfers. But, the process of a loan balance transfer is now extended for almost all types of credit facilities such as home loan, car loan, education loan and personal loan, etc. Hence, most financial institutions offer personal loan balance transfer to their customers.

A personal loan balance transfer is a process where you can transfer your total outstanding personal loan amount from one lender to another for any reason. Whether it’s due to lower interest rates or better offers on loan you can make the decisions accordingly. Moreover, your balance transfer loan process does not require you to pledge any security or collateral. A personal loan transfer is mainly dependent on your capacity to repay the loan, creditworthiness or credit health.

The following are the key eligibility criteria for a personal loan balance transfer.

  • For a balance transfer process, the outstanding loan amount has to be at least Rs. 50,000.

  • You need to provide a record of your personal loan EMI payment. Ensure all of them are cleared or at least the previous twelve installment payouts of the existing loan will be checked.

  • If you have numerous loans/credit cards, you need to ensure all are good standing as per the requirements.

Documents Required for Balance Transfer

The following are the required documents for balance transfer loan for Salaried as well as Self-Employed individuals.

Documents for Salaried Individual

  • A duly signed personal loan balance transfer application form

  • Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)

  • The applicant's age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)

  • Residential Address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Home rent agreement etc)

  • The bank account statements for the last 6 months

  • The salary slip for the last 3 month

  • Passport-sized photograph

Documents for Self Employed

  • A duly signed application form for loan balance transfer along with passport size photograph

  • Proof of Identity (PAN card/driving license/passport/voter ID/Aadhaar Card etc)

  • Age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card etc)

  • The applicant's address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Rent agreement etc)

  • The balance sheet of the last 3 years along with the profit and loss statement of the business

  • The bank statement of the last 6-months of individual and business entity

Why go for a Balance Transfer on Your Personal Loan?

There are numerous reasons to get a Balance transfer on your personal loan.

  • Better rate of interest on a loan

Low-interest rates reduce the borrower's interest burden through reduced EMIs. It is always better to access the need, evaluate the offer and compare the interest rates and other features before making a final decision with the balance transfer facility.

  • For a longer loan tenure

When you transfer a personal loan you can potentially negotiate the tenure of the loan and get the repayment tenure of the loan extended as per your requirements. With an extended loan tenure, you can have the lower monthly burden of EMI but have a higher total interest payout.

  • To avail Top-up loan facility

Most banks offer a top-up loan facility along with personal loan transfer. In case, if you need more credit, you can consider going for a personal loan balance transfer at a lower rate of interest. In the case of top-up loans, the outstanding loan balance is directly paid to your previous lender and the fresh amount of loan gets credited to your account.

  • Better personal loan features

Depending on your credit history you may get an offer from other lenders offering better features on personal loans such as waiver of last EMI, zero processing fees, lower interest rates, etc. The personal loan balance transfer facility can thus not only reduce your personal loan interest burden, but you might also get a loan with better features.

  • Dissatisfied with your current loan providers services

If you're not happy with your current loan service provider. You can simply opt for a personal loan transfer and choose to go with a lender who can provide better services as compared to the current one.

Process of Personal Loan Balance Transfer

The process of balance transfer is hassle-free and straightforward. You need to contact the present lender and gain information about the outstanding amount and tenure. Once that is done, you can approach the new lender and understand the terms and conditions. You will have to carry out the necessary formalities for the transfer of loan. For a new lender, it is a new loan application and you will have to go through the entire process including the payment of processing fees.

The process of balance transfer is quick and convenient. The most important thing you need to consider is the personal loan EMI. When you transfer the loan, the EMI amount should reduce and it should be convenient for you to make the repayment.

After the transfer, the EMI will not be a big debt for you and you will be able to make payments in a smooth manner.

Personal Loan Balance Transfer Charges

Personal Loan Balance Transfer Charges can vary from lender to lender. The major charges include foreclosure charges, processing fees.

  • Generally, foreclosure charges are 5% of the outstanding principal amount. This needs to be paid to the existing bank.

  • Processing fees: This fee needs to be paid to the new bank, where you want to transfer the loan. It usually ranges from Rs. 999 to up to 2% of the loan amount.

Illustration of Transferring Balance of Personal Loan

Please note that the given illustration is only for representative purposes.

Consider, the outstanding amount of your existing personal loan to be Rs. 2 Lakhs with a tenure of 48 months (4 years). The current rate of interest is 14.5% p.a. You can opt for balance transfer facility in this case for lower interest rates. By transferring your existing personal loan of Rs. 2 Lakhs from 14.5% to 10.75%, you can reduce your EMI from Rs. 5,516 to Rs. 5,145. Thus, after balance transfer, your interest rate would be Rs. 17,795.

 

Existing Loan

New Loan

Balance Outstanding

Rs. 2 Lakhs

Rs. 2 Lakhs

Rate of Interest (ROI)

0.145

0.1075

Loan Tenure Remaining (months)

48

48

EMI

Rs. 5,516

Rs. 5,145

Monthly Reduction in EMI

 

₹ 371

Total Savings

 

Rs. 17,795

Important Aspects about Personal Loan Balance Transfer

Though Personal Loan Balance transfer facility is great option for hassle-free repayments, there are some factors that you need to consider:

Always carry a thorough research and compare the personal loan interest rates and offers of various lenders before making the final decision. See which lender is suitable for you and whose rate of interest suits your requirement and opt for this facility.

Compute the interest rates and EMI to be paid with the new lender by using the Personal Loan Balance EMI Calculator, present on the websites or the online portals of the lender. This will give you a fair idea about the actual savings that you can do and thus manage your finances.

There are some additional costs that come with Balance transfer option. This basically includes foreclosure charges that needs to be paid to the existing lender and processing fees to the new lender. So, make sure you consider this point while opting for balance transfer.

Last but not the least, ensure you have read all the terms and conditions properly before signing the dotted line.

Personal Loan Balance Transfer FAQs

  • ✔️Who can avail the personal loan balance transfer facility?

    A balance transfer is a process where you transfer the existing personal loan from one lender to another. If you have an outstanding loan and it has a high interest rate on personal loan, you can transfer it and enjoy a lower interest rate. This means you can reduce the burden of EMI payment.

  • ✔️When should one opt for the balance transfer on personal loans?

    A personal loan balance transfer is an ideal solution to settle your debts at a lower interest rate. A loan is transferred to save interest and reduce EMIs by switching to a personal loan with a lower interest rate and also avail an additional top-up loan from the new bank.

  • ✔️What is the repayment tenure in case I opt for the balance transfer of my personal loan?

    The repayment tenure usually ranges from 12-60 months.

  • ✔️What are the costs involved in balance transfer?

    Though it may vary from lender to lender, generally, the foreclosure charges are 5% of the outstanding principal amount. This needs to be paid to the existing bank.

    Processing fees: This fee needs to be paid to the new bank, where you want to transfer the loan. It usually ranges from Rs.999 to up to 2% of the loan amount.

  • ✔️Can I avail more money by opting for a balance transfer?

    Yes, you certainly can. Most banks offer a top-up loan facility along with personal loan transfer. In case, if you need more credit, you can consider going for a personal loan balance transfer at a lower rate of interest. In the case of top-up loans, the outstanding loan balance is directly paid to your previous lender and the fresh amount of loan gets credited to your account.

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