Personal loans are a quick option to get cash in emergencies or other needs. They offer flexible conditions that are based on the requirements for eligibility and the income of the person who is borrowing. They can be repaid as fast as 24 hours of depositing the funds you require into an account in your banking. However, such tempting financial aid usually comes with an element of risk. Yes, they come with the possibility of having a higher interest rate from 10.50% to 22 percent, which can affect your monthly cash flow if you’ve had to repay personal loans with increased interest rates. An ideal option to think about is an individual loan balance transfer.
What Is A Personal Loan Balance Transfer?
Transferring balances from your loan is moving your loan balance from one financial institution and a Non-Banking Financial Company (NBFC) to another. At first, this procedure was applied only to transferring the balance of credit cards to a different provider. Still, it also applies to personal, home, and other loans.
Why Should You Think Of Personal Loan Balance Transfer?
To get a higher rate in interest, the benefit of an option to transfer personal loans is that it reduces the interest rate and the cost of interest lenders with lower EMIs. Typically, the new lender will offer a lower rate for transfers of loans. Let’s examine an example of the process:
Let’s say you already have a Personal loan with an outstanding balance of Rs.3 lakh with an interest percent. The repayment term is five years, which will bring an EMI down to Rs.7295. If you transfer this outstanding amount to a different provider, you’ll get a lower interest rate, decreasing your pay. The borrower can save around Rs.35,000 by using the option of transferring balances. Check out the illustration below.
To enjoy appealing benefits and enhancements: The new lender could offer better rates and benefits to your loan in the shape of no processing fees or prepayment charges that are not charged and more.
You may be able to obtain a top-up for the loan you have already taken out: If you have an excellent credit score and a good credit history, The new lender could provide a top-up to your loan when you transfer the balance to the institution. Some lenders might give a longer term of your current balance in exchange for this transfer.
Choose an institution that provides better customer services: One of the main reasons that borrowers choose to move to a different lender is because they want better customer service. If you’re not content with your current lender, the balance transfer lets you pick a bank with more efficient customer service.
You can have the chance to increase your score on credit: By opting to transfer your balance and repay your loan more quickly and more efficiently, you can have the opportunity to improve your credit rating.
Eligibility Criteria For A Personal Loan Balance Transfer
In the case of transferring a balance from a personal loan, The eligibility requirements for a balance transfer apply the same way as those for a personal loan, but they vary from lender to lender. The most basic eligibility criteria lenders look for but it is outlined below:
- You should have a personal loan from a bank or NBFC
- The minimum amount outstanding for transfer of balances should be Rs.50,000
- You must have a perfect track record of repayments on the current personal loan over the last 12 months or at least
- A loan or credit card that is in good standing as per the criteria of the new borrower or the financial institution’s requirements
Documents Required For A Personal Loan Balance Transfer
For Employed Persons
- The form must be signed and dated as required by the new lender.
- Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
- Address Proof of Address (Aadhaar Card/Passport/Landline bill/Latest Electricity bill/Rent agreement, etc.)
- Photographs of the passport size of the person applying
- Copy of PAN Card
- Bank statement for the last six months
- The previous three months’ salary slip
- Personal loan statement from the current lending institution (the loan that must be transferred)
For Self-employed Persons
- The form must be signed and dated as required by the new lender.
- Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
- Address Proof of Address (Aadhaar Card/Passport/Landline BillLatest Electricity bill/Rent agreement etc.)
- Photographs of the passport size of the person applying
- TAN Card
- Three years ago, the Balance sheet, together with a profit and loss report for the business
- Last six months’ bank statements of both business and individual entities.
- A statement of personal loan from your current lender (the loan that has to be transferred)
Things To Consider While Opting For A Personal Loan Balance Transfer
Every financial decision requires careful consideration of a variety of aspects. Transferring a balance from a personal loan is not any different. While it can have many benefits, one must consider all aspects to assess its advantages. Consider the following factors:
Determine the amount you’ll earn: Once you receive an offer, determine the monetary benefits you’ll receive through this balance transfer. This will allow you to decide whether or not it’s worth it to that balance transfer.
Consider the costs involved: Though you might get an attractive interest rate, you might have to pay processing fees with the new lender and foreclosure costs with the current lender, etc. Researching these costs before making the balance transfer is advisable to determine the benefits you will get from the transfer.
Be aware of the additional benefits offered: The new lender might offer a variety of offers to tempt you. Take a close look at these offers to determine if they meet your requirements, and then proceed with the balance to transfer. Sometimes, we buy a product due to its other benefits and find that we don’t use one of the options. To prevent this from happening, ask about the offer’s conditions and terms before making a choice.
Take the time to read through all terms and terms and conditions. Take the time to read all the terms and conditions of the loan product. Take the time to read the fine print to know what you’re engaging in. This will help avoid unwelcome surprises in the future.
Closing statement: Borrowers benefit from a balance transfer service to reduce the total amount of interest and generate savings in the long run. Transferring personal loan balances is usually just a few working days with minimal paperwork. Additionally, borrowers will be able to repay the loan faster due to the lower interest burden and increased income as time passes. Balance transfer of personal loans is a viable option when it is done after careful review and analysis of the balance transfer plan.
