Transfer your existing personal loan to another lender to get the reduced interest rate and better terms. Pay low EMIs by opting for a personal loan balance transfer facility.
A Personal Loan Balance Transfer is transferring your ongoing Personal Loan from the existing lender to a new lender. Even a difference of 0.50% to 1% in interest rate will reduce the EMI considerably, depending upon the outstanding balance of the existing loan.
To avail this facility, you have to request for a foreclosure statement with the existing lender. On receiving the foreclosure letter, apply for personal 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.
There are various reasons for you to opt for a Personal Loan Balance Transfer including:
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.
For Salaried employees
Along with the above documents, a foreclosure letter from the existing bank indicating the outstanding balance in the loan account should also be submitted.
If you are paying a high rate of interest for your existing loan and feel the EMI burden is not affordable, then it is recommended to look for options where you can get a Personal Loan at a lower rate. Generally, the interest rate on Personal Loan ranges from 10.99% to 20%. Look for an option where you will be getting a considerably lower rate of interest.
It is better to make the decision of switching to a new lender who offers a better rate in the early stages itself since the outgo towards the interest out of the monthly EMI is higher in the initial months. If you switch over to a new lender in the early stages of your availing the loan, saving towards the interest outgo will be higher. Before deciding the new lender, you should calculate the savings on balance transfer using the Personal Loan balance calculator.
The Personal Loan Balance Transfer Calculator will have a list of lenders who will offer the Personal Loan Balance Transfer facility along with their interest and other charges of each lender. With this, you will be able to gauge the extent of ultimate savings after considering the pre-payment charges of the existing lender and the processing fee of the new lender. On doing the exercise, if you feel that the Personal Loan Balance Transfer will be a lucrative one, then go for it.
Following is an illustration of how you can save on the total payable interest by opting for a personal loan balance transfer:
|Details||Existing Personal Loan||New Personal Loan|
|Outstanding balance to be transferred||Rs. 5 Lakhs||Rs. 5 Lakhs|
|Rate of interest||15% p.a.||10.50% p.a.|
|Remaining tenure||Rs. 3 years||Rs. 3 years|
|Payable EMI||Rs. 17,333||Rs. 16,251|
|Difference in EMI||Rs. 1,082|
|Total payable interest||Rs. 1,23,976||Rs. 85,044|
|Total saving||Rs. 38,932|
If at any point in time, you feel that you are paying a very high rate of interest for the Personal Loan with your existing lender, you try to negotiate the rate. Considering your track record and credit score, the existing lender may reset your interest. In case that is not possible then you should consider switching over to a new lender.
Personal Loan Balance Transfer involves the following charges:
Banks normally collect a charge for the closure of a Personal 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 considerably 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.
Now get Navi personal loan of Rs. 10,000 to Rs. 20 Lakhs at lowest interest rate starting from just 9.99% per annum. Repay in easy instalments of 3 to 72 months. The processing fee ranges from 2.5% to 6% of the sanctioned limit + GST.
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A Personal Loan Balance Transfer is the facility availed for transferring the balance outstanding of your existing Personal Loan from the existing bank to another bank or other financial institution.
Consider the charges and total associated with the transferring your existing loan to the new lender. If you are getting a low interest rate and there are minimal transfer charges, then only opt for Personal Loan Balance Transfer. It is advised to opt for this facility in the early stage of your loan repayment.
Personal Loan Balance Transfer is required when the rate of interest charged by your existing lender is higher than the current market rate. You can negotiate the interest rate with your existing loan provider. If they deny, opt for a balance transfer to another lender who is offering the low interest rate loan. The new lender will take over the balance loan amount by paying off the entire outstanding loan balance to the existing lender and the EMIs will be paid to the new loan provider after the balance transfer.
You can transfer the balance of your Personal Loan to a Credit Card, but you will still own the debt and considering the interest cost, you may not gain any significant benefit. Instead, over a period of time, you will end up paying a higher interest cost. So, though it is possible to transfer the loan balance to Credit card, it is not such a lucrative idea.
In addition to the parameters required to be eligible for a Personal Loan, the following eligibility factors should be met to qualify for the balance transfer of your Personal Loan:
The process to transfer personal loan from one bank to another 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.
Personal Loan Balance Transfer involves the following charges: