In a situation when there is a dire need for money you would have availed a Personal Loan from the first lender who approved your loan without comparing the cost with other financial institutions. Over a period of time, you realise that the equated monthly instalment (EMI) pay out towards the loan has become very stressful and you will be on the lookout for ways to reduce the burden by saving the interest cost. The interest cost can be reduced either by negotiating for a better rate with your existing lender or by shifting the loan from the current lender to another lender offering the loan at a lower rate.

A Personal Loan Balance Transfer is the process of shifting your Personal Loan from the existing lender who is charging a high rate of interest to a lender who is offering the same product at a comparatively low interest. Even a difference of 0.50% to 1% in the rate of interest will reduce the EMI considerably depending upon the outstanding balance of the existing loan.

The process begins by placing a request for a foreclosure statement with the existing lender. The existing lender will give a foreclosure letter with the current loan details if the foreclosure is accepted.

On receiving the foreclosure letter, apply for a loan with the new lender. If the loan is approved, the new lender will take over the outstanding balance from the existing lender by paying off the amount and you will be paying the EMI to the new lender henceforth.

Once you have decided to switch over the existing Personal Loan balance to another lender who is offering a better rate of interest, you will have to do a thorough cost-benefit analysis.

A Personal Loan Balance Transfer Calculator will enable you to do this cost-benefit analysis which is otherwise a very elaborate process.

With MyMoneyMantra Balance Transfer Calculator, you can calculate your loan amount eligibility and also identify offers with lower Personal Loan rates compared to your existing Personal Loan rates. You can do complete market research before choosing the bank to transfer your loan to and apply for a balance transfer in terms of current interest rates, processing fees, Personal Loan Top Up schemes from various banks.

You will have to use the Personal Loan Balance Transfer Calculator to understand the saving on the cost of the loan on transferring the balance from the existing lender to a new lender with a lower rate of interest. You can use the MyMoneyMantra Balance Transfer Calculator. For this, you have to make use of the digital platform provided by MyMoneyMantra and do the calculation by following some simple steps:

• To begin with register as a user on MyMoneyMantra website
• Click on the Balance Transfer Calculator mentioned under Financial Tools tab
• Fill in all the relevant information required for comparing the EMI of different banks like loan amount, loan tenure, current interest rate, new interest rate, and new loan tenure.
• Click on the Calculate button to get the result
• Once you get the result, you can choose the bank providing the lowest interest rate from the Personal Loan offers list on MyMoneyMantra's website under Personal Loan tab.
• Once the filling of the application for a balance transfer is complete, and the process initiated the representative of MyMoneyMantra will contact you and guide you through the process of documentation, and so on, till the approval.
• On approval, the loan balance will be taken over by the new bank and you will start paying the EMI to the new bank henceforth.

Before opting for Personal Loan Balance Transfer it is always better to access the need, evaluate the offer, and compare the rates and features.

For this, you need details of interest rates, processing charges, of different lenders. In short, you will have to do thorough market research before taking a decision.

With a Personal Loan Balance Transfer Calculator, the details collected from various lenders will be available on a single screen. You can at the comfort of your home or office, do the research, compare the costs and can go for the best deal.

The following details of the existing loan and for the new loan should be readily available.

Details of the existing loan

• The loan amount sanctioned
• The outstanding loan balance
• Interest rate
• Loan tenure
• Number of EMIs paid
• Pre-payment charges
• Current EMI

Details for the new loan

• The outstanding balance of the earlier loan
• Interest rate
• EMIs to be paid
• Processing charges

The details of the existing loan will remain the same and you keep changing the details of the new loan as per the offers provided by different lenders. The extent of saving with the new loan will be instantly calculated. The calculator also provides a graphic as well as tabular description of your loan repayments. Amortization table created provides a detailed overview of the repayment schedule. This will enable you to compare the rates and features of different lenders and you can choose the best deal.

There are various reasons for you to opt for a Personal Loan Balance Transfer including:

• Reduced interest rates: You will have the benefit of lower interest rate with a loan balance transfer. You will generally choose a bank which will give you the best interest rate thus lowering the interest burden on the loan. With this, the EMI will also be reduced which will give you a respite from the month on month financial stress.

• Longer tenure: While switching to a new bank you can negotiate on repayment terms and opt for an extended tenure. This will help reduce payout towards EMI and will lower your financial stress.

• Improve the credit score: Due to financial constraints, if you at some point in time feel that you will not be able to manage further EMI on time, it is wise for you to consider the transfer of loan balance at this juncture. You would have paid the earlier EMIs on time and not paying the instalment on time further will only end up in reducing your credit score. Instead, you can go for a Personal Loan Balance Transfer which will increase the credit repayment cycle and will help to manage your high credit score.

• Top-up loan: If you have an existing loan with a bank and you are in need of an additional loan, you can approach another bank that will be willing to offer a loan at a better rate with a top-up as well. This is the best feature of loan balance transfer when you are in need of additional funds along with a reduction in interest cost.

The eligibility of an applicant for a Personal Loan Balance Transfer is mainly assessed by income stability and repayment capacity. Apart from this, there are other common eligibility criteria that have to be satisfied to qualify for the Personal Loan Balance Transfer.

• The minimum outstanding loan balance should be 50,000 to initiate the loan balance transfer.
• The EMIs for the current loan should have been paid regularly and on time. At least 12 EMIs of the current loan should have been serviced regularly.
• The credit score of the applicant should be good. The minimum score required will be above 700.

*The eligibility may change from lender to lender

For Salaried employees

• Duly filled application form for a Personal Loan Balance Transfer
• 2 recent photographs of the applicant in passport size
• ITR for the last 2 years
• Proof of Identity: Aadhar Card /Passport/ PAN Card/ Voter ID/ Driving License
• Proof of residential address: Registered Rent Agreement/ Leave and License/ Utility Bill of at least three months/ Passport.
• Proof of income: Last 6 months' salary slip, Form 16 of 2 years, Bank statement for at least the last 6 months that reflects salary being credited or EMI being debited.

For Self-Employed

• Duly filled application form for Personal Loan Balance Transfer
• 2 recent photographs of the applicant in passport size
• Proof of identity: Passport/ PAN Card/ Voter ID/ Driving License
• Proof of residential address: Registered Rent Agreement/ Leave and License/ Utility Bill of at least three months/ Passport.
• Proof of business: GST Returns/ company's incorporation details
• Address proof of the business
• Accounts and balance sheets showing profit and loss statements which have been certified by a CA, the proof of the business's existence a copy of the partnership deed and business profile.

Along with the above documents, a foreclosure letter from the existing bank indicating the outstanding balance in the loan account should also be submitted.

Personal Loan transfer involves charges at two stages. Pre-payment charges by the existing bank and processing fees and documentation charges by the bank that takes over the outstanding balance.

Banks normally collect a charge for the closure of a loan before the end of the tenure in order to discourage closure of the loans before maturity. The charge ranges from 2% to 5% on the outstanding principal along with an applicable tax on the day of pre-payment which may be huge when the loan quantum involved is high.

The bank that takes over the loan balance will charge an originating charge or processing charge ranging from 0.50% to 2% on the loan amount along with an applicable tax which also may be considered high if the loan quantum is high.

While doing the cost-benefit analysis to understand how much you stand to gain, even these charges have to be considered, and if the gain is substantial then it is advisable to go for a loan balance transfer.

The Personal Loan schemes differ from bank to bank and each bank has its own rates of interest, repayment tenure, and terms. Also, other charges like pre-payment charges and processing charges differ from bank to bank. To collect all the comparative information all by ourselves to assess the cost-benefit for loan balance transfer will be very difficult and confusing. MyMoneyMantra can help you through the whole process.

MyMoneyMantra has all the information assembled on a single screen where you can compare the different products.

We also provide requisite information and guidance in respect of the following:

• In determining the eligibility depending upon your income and repayment capacity
• To choose the appropriate product by comparing different products
• Highlight the processing fee of different banks which helps you to select the offer that gives the most significant benefit.
• Will expedite the documentation process making the turnaround quick

We have information about a host of products from various banks and non-banking financial companies (NBFCs) and you will have a wide range to choose from.

We also have experts who can:

• Assess your profile and determine your eligibility
• Analyse your repayment history and advise accordingly
• Will make you understand the fine print, with regard to terms and conditions, especially when the offer is seemingly attractive and tempting.

What is a Personal Loan Balance Transfer?

A Personal Loan Balance Transfer is nothing but switching the principal balance outstanding in the existing loan to another bank or NBFC offering the same product at a lower rate of interest and better features. The new lender will take over the outstanding balance and you will have to pay EMIs to the new lender after the loan balance transfer.

Is balance transfer a good idea?

Ideally, you would consider the transfer of loan balance when you stand to gain in terms of the cost of the loan. The Personal Loan interest ranges from 10.99% to 20%. If you have been paying a very high rate of interest and by switching over to a new bank or NBFC who is offering the same product at a lower rate of interest, you will stand to gain sufficiently on the interest cost. In such a case, the transfer of loan balance is a good idea.

How does Personal Loan Balance Transfer work?

The need for loan balance transfer arises when you feel that the rate of interest charged by the existing loan provider is high. You can either negotiate the interest rates with the existing loan provider or can opt for a loan balance transfer to another loan provider who is offering the same product at a considerably low interest. The new loan provider will take over the loan balance by paying off the entire outstanding loan balance to the existing loan provider and the EMIs will be paid to the new loan provider after the balance transfer.

Can the Personal Loan balance be transferred to Credit Card?

Yes. You can transfer the Personal Loan balance to a Credit Card. However, you will still own the debt and considering the interest structure, you may not stand to gain out of the transaction. Instead, over a period in time, you will end up paying a higher amount. So, transfer of loan balance to Credit Card, though possible, is not such a lucrative idea.

What are the eligibility criteria for Personal Loan Balance Transfer?

In addition to the primary eligibility criteria of income stability and repayment capacity, the following eligibility criteria should be satisfied to qualify for the loan balance transfer.

• The minimum outstanding loan balance should be 50,000
• The EMIs for the current loan should have been paid regularly and on time. At least 12 EMIs of the current loan should have been serviced regularly.
• The credit score of the applicant should be good. The minimum score required will be above 700.

What are the Personal Loan Balance Transfer charges?

Personal Loan Balance Transfer involves pre-closure charges by the existing bank which ranges from 2% to 5% on the loan balance plus applicable tax and processing fee by the new bank which ranges from 0.50% to 2% of the loan amount plus applicable tax. So, while calculating the gain on transferring the balance to the new bank, the above two charges also should be considered.