Personal Loan Balance Transfer

Personal Loan Balance Transfer

Personal loans usually have very high rate of interest with minimum 11% per annum to as high as up to 26% per annum, making personal loan balance transfer a good choice to save your hard-earned money as well as repay your debt with ease while managing day-to-day struggle of life.

You can avail balance transfer offers on your existing personal loan on at least 1% lower interest rate. However, the offered interest rate doesn't go below the minimum interest rate offered by the bank/FI.

Advantages of Balance Transfer

Longer Repayment Period – In case you are facing any urgent finance crisis which may affect you upcoming EMIs, resulting in late payments. Transferring your existing personal loan is much better option than continuing the current personal loan with penalties charges by the current lender. Availing balance transfer will give you more time to comfortably repay the loan while dealing with your urgent finance crisis.

Save on Interest – Transferring your existing personal loan to other lender is a great way to save on the interest rate applicable on the loan. After servicing the minimum required period to be eligible for the balance transfer, you can simply check personal loan balance transfer offers with low interest rate offered by other competing banks.

Helps in Improving Credit Score – Transferring your existing debt to new lender is a best choice against settling the debt with the existing lender and screwing up your credit score. It helps you get enough time to collect funds and repay your debt while improving your credit score further. Personal Loan balance transfer reflects as a new loan in your credit history which can help you increase your credit score if you're paying timely EMIs.

Avail Urgent Cash in Emergency – In case you are stuck with an emergency and need additional funds, you can simply choose balance transfer as your escape. In terms of top-up funds, banks/FIs charges slightly higher interest rate than the personal loan. So, you can simply choose a new lender who is offering top-up loan along with balance transfer facility and charging low interest rate than the current interest you're paying.

Combine All the Debt and Pay in Single EMIs– Balance Transfer is also a good choice for you if you have multiple personal loans running with more than one lender, be it existing personal loan or credit card debt. You can simply choose to transfer all your existing debt to a lender which will result in single EMIs in comparison of multiple EMIs for different lenders. Hence, it will help you release the burden on your pocket.

Reasons for Balance Transfer

High Interest Rate – A prime reason to opt for personal loan balance transfer is if you are paying high interest rate on your personal loan as compared to low interest offered by other lenders. The personal loan availed at floating rates are usually higher than floating rate loans. It can be an issue especially if your current lender doesn't provide an option to switch from fixed to floating rate of loans or vice-versa. So, you can simply opt for a balance transfer option and transfer your existing personal loan to a lender who is offering low interest rates.

Not satisfied with the current lender – Balance transfer is a good option if you are not satisfied with the services offered by the current lender such as not offering the option to increase/decrease the EMI amount or high penalties. In this case you can simply transfer your existing personal loan to other lender who is offering better services and pricing as well as avail additional funds.

Important Factors to Consider Before Transferring the Loan

When transferring your existing personal loan, you must consider few important factors that you should consider before transferring your existing debt from your current lender to a new lender.

Collateral – In case you have availed the personal loan against a collateral, then you must ensure that you don't have to pledge your collateral to the new lender if you have paid a large portion of your existing personal loan. It is quite considerable since you free up collateral can be used further for availing finance. This collateral can be any asset such as Insurance Policies, Valuables (Gold Jewellery), and Investment documents (Fixed Deposit, Mutual Funds, Bonds, and Provident Funds) etc.

Applicable Fees & Charges for transfer – Though balance transfer helps you get reduced EMIs, the process for transferring an existing personal loan comes with applicable charges. You have to pay a prepayment charges to your existing lender to close the loan account before the actual repayment period. Apart from it, you also need to pay a processing fee to the new lender to whom you're transferring the loan. Aside from both of these charges, there are few other charges such as stamp duty, legal charges, valuation fee, technical charges as well as the GST will have to be borne by the borrower.

Repayment Track on Existing Loan – The repayment track of your existing personal loan is something which is most crucial for your balance transfer. Banks/FIs usually take a look on your last 12 months repayment period and check if you have paid installments on time or have made a default.

Analysis of the new offer – Before finalising the offer with the new lender, you must analyse the offer presented in front of you. You need to check if the bank is offering you fixed or floating rate of interest as per your requirements, what are the applicable charges and calculated how much you have to pay in total as per the increased repayment period. Also, check if the new lender calculates interest rate on daily reducing balance as opposed to monthly reducing balance, since EMIs calculated on the basis of daily reducing balance are usually lower than the other.

Balance Transfer Offers

Bank/FI Interest Rate Processing Charges Loan Amount Tenure

YES Bank Persoal Loan BT

11.49% - 12.25%

Rs. 3,999

Up to Rs. 10 Lacs

Upto 60 Months

HDFC Bank Personal Loan Balance Transfer

11.39% - 12.99%

Rs. 1,999

 

Upto 48 Months

Indusind Bank Personal Loan Balance Transfer

15%

Upto 2.50% of the loan amount

Up to Rs. 5 Lacs

Upto 60 Months

Citi Bank Personal Loan Balance Transfer

18%

2.50% of loan amount

Min Rs. 300

Upto Rs. 15 Lacs

Upto 60 Months

Kotak Personal Loan Balance Transfer

10.99%

Upto 2.5% of the loan amount

Upto Rs. 15 Lacs

Upto 60 Months

ICICI Bank Personal Loan Balance Transfer

12.99%

Upto 2.25% per annum of loan

Up to Rs. 20 Lacs

Upto 60 Months

Eligibility Criteria

    • The minimum age of a salaried borrower applying for personal loan is 21 years. However, in case of self-employed borrowers, the minimum age criteria is 25 years.
    • The maximum age of a salaried borrower should not be more than 58 years including the repayment period for personal loan balance transfer. However, this criteria is up to 60 years for Self-employed borrowers.
    • The minimum outstanding loan amount should be at least Rs. 50,000.
    • Minimum 6 EMIs must have been paid on existing personal loan.
    • Borrower should not have any payment default made on the existing loan and must have a clean track record for at least past 12 months.

Documents

  • For Salaried
    • Most recent statement of your existing Personal Loan
    • Repayment Schedule of your existing loan.
    • Bank Account Statement for Last 6 Months.
    • Last 3 months Salary Slip / Certificate
      • KYC Documents
  • For Self-Employed
    • Last 3 years' Balance Sheet with P&L Account Statement
    • Most recent statement of your existing Personal Loan
    • Repayment Schedule of your existing loan.
    • Bank Account Statement for Last 6 Months for self as well as Business Account.
    • KYC Documents

How to Apply

    • Click here to check various personal loan balance transfer offers provided by different banks and compare them.
    • Make an assessment on how much you would have to pay in total during the increase tenure including the applicable processing fee as well as other allocated charges.
    • Once you have finalised a new lender as per your calculation, click on "Apply Now" button and enter your required details.
    • Make sure you cross check all the information provided and click on "Submit" button.

Note: Now, your application for personal loan balance transfer will be reviewed by the chosen bank/FI and approved accordingly, which usually takes 3 to 5 days depending upon the lender.