Things They Should Know about Transferring Personal Loan Balance

A personal loan is an excellent solution to a variety of money problems. Now, most lenders in India give personal loans to applicants. Personal loans are among the most pricy types of loans, even though they may often save their life. Their interest rate is also very high when compared to other loan kinds.

Due to a lack of money, Ankit chose to take out a personal loan. But after a few months, he felt that the monthly payments were hurting his finances. Ankit changed to a new lender as a result, who had a low rate of interest and paid off the balance with lesser EMIs. This is known as a loan balance transfer. It enables them to transfer loans from one lender to another in exchange for better loan conditions, such as low-interest rates.

Moving the balance of their loan to another lender is known as a balance transfer. If the other lender is giving personal loans at a lower rate of interest than their current lender, it might help them save a huge amount of money. While low-interest rates are the main perk for a person to transfer lenders, they can also use this option if the other lender gives a longer repayment term, better services, or other perks. But, keep in mind that not every loanee will take perks from a balance transfer. In a few cases, keeping the loan with their current lender makes better sense.

When should one opt for a Personal Loan Balance Transfer

• They are making big EMI payments; a low-interest rate will cut the interest portion of their EMI payment, lowering their overall EMI payment. A personal loan EMI calculator may be used to calculate the new EMI figure and the amount of interest they will save over the loan’s term.
• They are not happy with their existing lender: If they are unhappy with the terms offered by their present lender, they may move to one that offers better terms, such as no processing costs and no prepayment fees.
• A person’s income level is not stable, so what they make now can be higher than what they made two years ago. A Balance transfer is a good tool that helps them to keep a check on their debt, make changes to it, and adjust it as per their need.
• If they wish to add more money to their current loan: If they need more funds and have a solid credit history, they may do so by refinancing their loan.

Vital Steps to Consider Before They Avail a Personal Loan Balance Transfer

One should look around for a good balance transfer process. A quick phone call to a bank’s help desk will give them a clear sense of the balance transfer plans and prices the bank offers. One more thing to keep in mind is that some banks charge a processing fee for balance transfers based on the principal amount. The funds can also be sent to their account, where they can then pay them back to the original bank from where they got the loan in the first place. This is one more way to do the balance transfer process.

Eligibility Criteria

Eligibility criteria need to be met by a person if they seek a loan transfer-

• They should fall between the age group of 21 to 60.
• They should earn at least 20,000 INR every month.
• They need to have a personal loan from some other bank.
• They must have paid at least 12 EMI.
• They should have at least a 12-month history of timely EMI payments
• The normal CIBIL score range is 600+.

Documents needed for Personal Loan Balance Transfer

If they are qualified, they must provide the following data for the personal loan balance transfer process:

• A duly completed application form
• Current passport-size photos, loan statements, and transfer data
• ID proofs such as a passport, Aadhaar card, or voter ID.
• Their PAN card copies
• Their age proofs include their driver’s license, voter ID, passport, or Aadhar card.
• Their address proofs, such as a lease deed or the most recent utility bill.

Other paperwork for the self-employed:

• TAN card or GST number
• Balance sheet and profit and loss statements for the last three years
• Bank statements for the firm and the owner’s for the past six months

Other paperwork for a salaried person:

• Salary slip for the last 3 months
• Bank statements for the past 6 months

The Bottom Line

The transfer of a current personal loan from one lender to another is known as a personal loan balance transfer. On personal loans, they can get cheaper interest rates and longer payback terms. For personal loans to be eligible for balance transfers, many banks have varying needs for the total amount still owing on those loans. Check the costs and fees for the transfer of the balance of a personal loan. If they are not okay with the terms given by their current, think about a balance transfer.

Frequently Asked Questions

Do I need to submit any collateral or security while applying for a balance transfer?

No, they do not need to submit any collateral or security to apply for a balance transfer, as it is an unsecured loan and the same as a personal loan.

What is the fee that one has to pay for a balance transfer on their loan?

Apart from the interest rate, other fees may include:

• Processing costs payable to the new bank
• Pre-payment fee to be paid to the old bank
• Stamp duty to be paid on loan agreements in some states