Loan management is an integral part of financial management. If you have ever borrowed a personal loan or are thinking to go for it, you must know about the feature of personal loan balance transfer which can help you save big money on your interest payments.
There are chances that your current lender is charging you a higher interest rate for the borrowed loan amount, leading to increased burden and hampered financial planning. In such a case, you may opt to transfer your personal loan balance instantly. Read this blog to find out how you can do so!
What is Personal Loan Balance Transfer?
A personal loan balance transfer is a procedure through which you can shift your personal loan from one bank to another. Based on the outstanding balance of the present loan, even the slightest difference of 0.50 % to 1 % in the interest rate will reduce your monthly instalments by a huge amount. This would help you save you more money and secure benefits in the long run. The best time for a personal loan balance transfer is when you want debt consolidation or are paying high-interest rates.
Personal loan balance transfer requires you to submit a foreclosure statement to the new lender, for which you must ask you current bank or lender before applying for the transfer. As you get the foreclosure statement from the bank, you can apply for an instant personal loan with the new bank. If the new lender approves your application, he will pay the outstanding debt to the former lender/bank. Let us discuss the features of a personal loan balance transfer to other banks in detail.
Features and Benefits of Transferring Personal Loan
Explained below are the top features and benefits of personal loan balance transfer-
- Low Processing Fees
You can get better repayment tenures by refinancing your loan. Moreover, you have to pay a small processing fee and repayment charges. All this can help in saving a significant amount of money.
- Extended Loan Tenure
You may get an extended loan tenure for a personal loan balance transfer. The new bank will let you personalise your repayment plan, allowing you to increase your repayment period by months or years.
- Low-Interest Rate
As you transfer your loan amount to another bank, they give you a lower rate of interest. It will decrease your EMI and help you pay your loan easily and quickly.
- Top-up Loan Facility
Generally, banks enable a top-up loan facility as you transfer a personal loan from a current bank. This may help when you want more credit. It is possible to avail higher credit through a personal loan balance transfer from your previous bank to a new bank.
- Quick Processing Time
It is quick and simple to transfer the personal loan balance. If you fulfil the eligibility criteria and submit the necessary documents, it might be processed and paid quickly. Once the loan is sanctioned, the loan disbursal will take one to two business days. Some banks might send the cheque via email to your residence.
Who is Eligible for a Personal Loan Transfer to Another Bank?
Below are the categories of people who can apply for transferring personal loan:
- For Salaried People: The minimum age of such individuals should be 21 years. The maximum age at your loan maturity can exceed 60 years or retirement.
- For Self-employed People: The business of the self-employed should have existed for at least 2 years. Although different lenders have different criteria for this. Some ask that you should have a running business of at least 3-5 years. The applicant’s minimum and maximum age must be 21 and 65 years (at the time of loan maturity), respectively.
- Some lenders also have the criteria of a minimum outstanding loan amount
Documents Required for Personal Loan Balance Transfer
Listed below are the documents required for a personal loan balance transfer:
- Bank statements from the past 3 to 6 months
- Net banking or debit card details
- A valid KYC
- Identity proofs like Aadhaar, driving license, PAN card, and voter’s ID
- Residence proof like utility bills, passport, leave, and license agreement
Steps for Personal Loan Balance Transfer Process
Here are the steps involved in the personal loan balance transfer process-
- Search for a bank you want to transfer the loan to. You can do this for any of the above mentioned reasons, like an extended repayment period, better features, or lower interest rates.
- After you have found a new lender, estimate the cost of transferring the loan to another bank. While calculating the cost, consider the prepayment fee, the difference in interest rate, and much more. If it is a feasible cost, get going with the loan transfer.
- Apply for a NOC (No Objection Certificate) and foreclosure statement with the existing bank.
- Disclose your prior loans and payments to the new lender you are applying for the new personal loan.
- Get a letter of approval and disbursement from the new bank and repay the loan with the current lender.
Now that you know better, opt for a personal loan balance transfer to lessen your financial burdens. Getting a personal loan transfer to another bank is easy and quick. All you need is a few documents and a small fee the new lender charges. Also, there is no necessity to provide collateral during the process. Apply for it today if you are an eligible candidate.