Personal Loan Balance Transfer: Features, Eligibility Criteria, and Documentation Process

July 05, 2022

Are you finding it burdensome and challenging to repay your loan due to exorbitant interest rates? How about if we said there was a solution to your concern? Balance transfers for personal loans might be the solution to relieve you from this burden.

Personal loans prove to be the best solution to meet our diverse financial needs. But, an intriguing financial aid always tends to have a downside. The high-interest rates on personal loans can take a toll on your monthly cash flow. In the course of repaying a loan, we often find ourselves in testing situations. You can now save a fortune on EMIs and interest by transferring your personal loan balance.

But when is it an ideal time to opt for a personal loan balance transfer? In the right circumstances, personal loan balance transfers can prove beneficial if they are precisely examined and evaluated.

Do your loan terms seem unsatisfactory to you? Perhaps this blog will be of interest to you. For your convenience, we have outlined the benefits, eligibility criteria, and the overall process for applying for a personal balance transfer.

Personal Loan Balance Transfer: Overview

Banks and non-bank financial institutions provide borrowers with a personal loan balance transfer facility that allows them to transfer their personal loans at lower interest rates. When opting for a balance transfer, you should carefully compare the offers and choose the best one that meets your requirements.

The applicant is not required to pledge collateral against a personal loan balance transfer. During the process, the current lender charges foreclosure fees whereas the new lender might charge processing fees.

Features and Benefits of Personal Loan Balance Transfer

Given below are some of the features and benefits of a personal loan balance transfer, which makes them an ideal tool to save repayment costs:

Attractive Rate of Interest

The most significant advantage of a personal loan balance transfer is the reduction of interest rates, resulting in lower EMIs. This facility aids in lowering the interest burden on the borrower. The new institution will offer lower interest rates based on the applicant’s financial background. This helps the borrower to repay the amount at lower amounts and a relaxed rate.

Extended Repayment Tenure

When a personal loan balance transfer is made, the term of the existing loan can be negotiated. Loan repayment periods can be extended or reduced at the applicant’s discretion. In accordance with the negotiations, EMI and interest payable will vary. 

Top-up Facility

The term “top-up loan” refers to additional financial assistance provided by banks and NBFCs above and beyond the existing mortgage. Many lending institutions offer top-up on a balance transfer of a personal loan at a competitive price and relatively lower interest rate.

Enhanced Features

By transferring your personal loan balance, you can benefit from additional features as well as a lower interest burden. The financial institutions offer diverse benefits such as zero processing fees, lower interest rates, an exemption on last EMI, etc. to applicants with a positive financial history and a credit score above 750.

Eligibility Criteria For A Personal Loan Balance Transfer

Banks and NBFCs offer personal loan balance transfer to both self-employed and salaried individuals. However, the applicant is required to meet the eligibility criteria set by the lending institution. Given below are some of the conditions the applicant will have to fulfill to be eligible for a personal loan balance transfer:

Minimum Age 21 years
Maximum Age 60 years
Work Experience
  • 2 years of total experience
  • 1 year of experience at the current employer
  • 3 years of business vintage (if self-employed)
Minimum Salary INR 15,000
CIBIL Score 750 and above
Nationality Indian

Documents Required For Personal Loan Balance Transfer

Given below are some of the documents that an applicant will have to submit to apply for a personal loan balance transfer:

Particulars Salaried Individuals
Application Form
  • Duly signed application form
  • Attach passport size photograph
Identity Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Voter ID
  • Passport
Age Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Voter ID
  • Passport
Address Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Passport
  • Landline Bill
  • Electricity Bill
  • Rental Agreement
Income Proof
  • Previous 6 months bank statements
  • Previous 3 months salary slips
Current Loan Documents Statement of the personal loan from the current lender that has to be transfered

 

Particulars Self-Employed Individuals
Application Form
  • Duly signed application form
  • Attach passport size photograph
Identity Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Voter ID
  • Passport
Age Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Voter ID
  • Passport
Address Proof
  • Aadhaar Card
  • PAN Card
  • Driving licence
  • Passport
  • Landline Bill
  • Electricity Bill
  • Rental Agreement
Income Proof
  • Previous 3 year’s balance sheet 
  • Profit and loss statement
  • Previous 6 months’ bank statement of the individual and business entity
Business Proof
  • Business PAN Card
  • Business Address
  • Business vintage proof
Current Loan Documents Statement of the personal loan from the current lender that has to be transfered

Personal Loan Balance Transfer Process

A personal loan balance transfer can be a smart move if you are being charged a higher interest rate on your current loan than the one offered by your new lender. The process is unique in the sense that it allows you to re-evaluate your debts and adjust them in accordance with your financial needs. Before making a decision, you should consider the following steps:

Evaluate The New Offer

A personal loan balance transfer calculator can help you compute the savings you’ll make by transferring your personal loan. It is imperative to compare all options before making a choice. Look into the interest rates and benefits offered by various lending institutions. You can also inquire at your nearest branch if the bank’s website doesn’t provide the details.  

Calculate The Costs

It is critical to be aware of the costs associated with balance transfers. Depending on the terms of the personal loan, the new lender might charge processing fees whereas the current lender will charge foreclosure fees.  The applicant must take into account all of these costs before making a decision. The various fees and charges associated with the process may drive up the eventual repayment cost, thus defeating the purpose of a balance transfer.

Read the Fine Print

There are a number of lending institutions that offer online balance transfer options for personal loans. Before signing the agreement, you must read the fine print and terms and conditions. Knowing all the terms and hidden charges associated with the transfer agreement is essential. This can help you understand the various factors associated with the process, and enables you to plan the repayment accordingly.

Compare Your Requirements With The Offers

It is crucial to make the right decision when transferring your balance. The applicant must only consider this facility if it aligns with their requirements. Consider your options carefully before making a decision. Evaluate the offer carefully, including the ramifications and benefits of the offer.

Why Should You Choose Personal Loan Balance Transfer?

In the following situations, a balance transfer on your personal loan is a wise decision:

  • Ideally, you should use this facility if your interest rates are significantly lower than your existing ones. By doing so, you would be able to save a lot over the course of your EMI and overall interest expenses.
  • Balance transfers are recommended during the initial years of a loan, as interest costs are typically higher during this timeframe. As the interest amount on your principal outstanding amount will be high, switching to a lower interest rate in your initial years will save you a significant amount.
  • You can consider a balance transfer facility when you require additional funds. A balance transfer enables you to claim a top-up loan on your outstanding principal instead of another loan.
  • Choosing this facility can be beneficial if your income has experienced a substantial rise and you can afford to pay high EMIs to clear the loan more quickly.

Banks Offering Personal Loan Balance Transfer

Given below are some of the banks in India that provide a personal loan balance transfer facility:

Bank Name Interest Rates Tenure
ICICI Bank 10.75% p.a. 5 years
HDFC Bank 10.50% p.a. to 21.50% p.a. 5 years
Kotak Mahindra Bank 11.50% p.a. to 24.00% p.a. 5 years
IndusInd Bank 10.75% p.a onwards 5 years
Bank of Baroda 10.50% p.a. 5 years
State Bank of India 9.60% p.a. 6 years
Axis Bank 21.00% p.a. 5 years

NBFCs Offering Personal Loan Balance Transfer

The table given below depicts the various NBFCs in the country that offer the personal loan balance transfer option:

NBFC Name Interest Rates Tenure
Tata Capital 10.99% p.a. onwards 5 years
HDB Financial Services 16.75% p.a. onwards 6 years
India Infoline 24.00% p.a. onwards 2 years
Aditya Birla Finance Limited 14.00% 3 years

Frequently Asked Questions (FAQs)

Can I opt for a balance transfer of my personal loan?

Yes, many banks and NBFCs offer balance transfers on personal loans for lower interest rates, flexible tenure, and additional benefits.

What is the benefit of a balance transfer on a personal loan?

A balance transfer on a personal loan offers you reduced interest rates, extended or shorter repayment periods, a top-up facility, and additional benefits based on your creditworthiness.

How do I transfer my personal loan to another bank?

Many banks and financial institutions offer the facility of a balance transfer, wherein you can transfer your personal loan to another bank and avail enhanced benefits.

What is meant by balance transfer in a personal loan?

A personal loan balance transfer allows the borrowers with a personal loan balance transfer facility that will enable them to transfer their personal loans at lower interest rates.

What are the charges on the transfer of a personal loan?

The charges may vary from bank to bank. Usually, the current lender will charge foreclosure fees, and the new lender might charge processing fees. You must go through the fine print before signing the agreement.

Looking for something more?

Category:Personal Loan

You may like these posts