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Know all about Balance Transfer Personal Loan

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The personal loan is becoming important as people are getting aware of this loan and its benefits. But most of us are still unaware of some concepts which can actually reduce their interest rates. One such concept is balance transfer of personal loan.

If you have taken the personal loan or planning to take it, then it can be very useful for you to opt for balance transfer. But first of all, you should know what balance transfer of personal loan is? Don’t worry; we are going to tell you everything about it so that you won’t face any issue.

What is Balance Transfer of Personal Loan?

As the name suggests, the balance transfer is the process of transferring the outstanding principal loan amount from your current lender/bank to another lender/bank. This type of transfer is usually done to receive better offers and reduced interest rates which the other bank/institution is providing on the loan amount. You can avail this facility in almost every bank and on every type of loan including personal loan, home loan, education loan etc.

It is a very good facility for the borrowers as various offers keep coming in the loan sector and lots of better opportunities along with it. You don’t need to regret if you have selected a personal loan offer and now feeling like opting some other loan offer with lower interest rates. Yes, you can transfer your principal loan amount to that loan offer even after some months or years. You will get revised and better interest rates through it. In case of the personal loan, banks also provide a top-up loan facility. Most people miss the opportunity of balance transfer due to lack of knowledge.

Eligibility Criteria for Balance Transfer of Personal Loan:

A borrower has to fulfil certain terms of eligibility for availing the balance transfer. Especially in the case of a personal loan, the new lender also wants to ensure by checking your credit score that you have the ability to repay the loan amount. The common eligibility terms are:

  1. Minimum current outstanding loan amount for the balance transfer is at least INR 50,000.
  2. The past record of loan EMI is also checked by banks. The borrower must have paid all the past EMIs for balance transfer.
  3. An additional loan or credit card in the new bank/institution will increase your chances of bank transfer in that particular bank.

Documents Required for Bank Transfer of Personal Loan:

For self-employed borrowers:

  • Appropriately filled and signed application form of balance transfer along with passport size photograph.
  • Identity proof and age proof (Adhaar Card/Passport/Driving license/Pan Card/Voter ID)
  • Address proof (Adhaar Card/Landline Bill/Passport/Latest Electricity Bill)
  • The balance sheet of business along with profit and loss of last 3 years.
  • Last six months bank statement of individual and his/her business.
  • Statement of the personal loan along with all necessary details from the current lender/bank.
  • TAN card.

For salaried borrowers:

  • Appropriately filled and signed application form of balance transfer along with passport size photograph.
  • Identity proof and age proof (Adhaar Card/Passport/Driving license/Pan Card/Voter ID)
  • Address proof (Adhaar Card/Landline Bill/Passport/Latest Electricity Bill)
  • Pan Card (compulsory)
  • Last six months bank statement
  • Statement of the personal loan along with all necessary details from the current lender/bank.
  • salary slip of last 3 months

After the document submission, the new bank will test your creditworthiness through credit score and decide to accept or reject your balance transfer on that basis. The bank checks ability of every contender before taking this risk.

Factors to be considered before availing Balance Transfer of Personal Loan:

Just as banks do proper analysis before giving the loan, one should also research properly before taking such financial decisions. You should consider a few points to avoid any fraud or loss while doing balance transfer in any bank/institution.

  1. Analyse new offer:  While you are thinking of transferring your loan amount to some other bank, you should analyse the new offer properly. You must calculate how much you are saving and what are the other advantages of this new offer are as compared to the current one. You should at least consider 2-3 main loan offers and select which gives you the most benefit in terms of money and other facilities. It’s an easy process as you can use the balance transfer personal loan calculator which is available online to calculate the difference and benefit.
  2. Check out the cost involved: It’s necessary to know that you have to pay some transfer cost along with processing fee of this new bank if you wish to go for balance transfer. You should check that cost beforehand so that you can go for the lender which is charging the least amount. Don’t forget that your main purpose of balance transfer is saving money so you should stick to it by checking every aspect of the policy.
  3. Read the loan transfer agreement carefully: The basic rule before signing any agreement is to read the agreement papers carefully. People usually read only the bold or highlighted statements but, they seldom know that this is what the lender really wants. Generally, Institutions purposefully write hidden charges or terms in complex language and small fonts. You should read all of them to find the loopholes. You must ask the bank representatives to explain if you can’t understand any point.

How Personal Loan Balance Transfer can be Beneficial for you?

Let’s know how this opportunity can be beneficial for personal loan borrowers.

•    You can get better interest rates.

•    Helpful in extending the loan tenure.

•    You can avail latest and better features by changing your loan plan.

•    Helpful in availing top-up loan facility.

•    Beneficial for those who are dissatisfied with the services of the current lender.

It’s never too late to gain knowledge and act upon it. So, contact your lender bank immediately to know whether this facility is available in their bank or not. Remember one thing; choose it according to your requirement.

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