When a customer transfers his or her outstanding loan amount to another bank or financial institute, especially for a lower rate of interest, the process is known as Personal Loan Balance Transfer of a Personal Loan. Almost all banks offer a balance transfer facility for every type of loan – personal, education, auto etc.
Thus, the applicable rates and charges will be of the new bank once the loan has been transferred. Balance transfer reduces interest rates and helps you save on the interest cost you have to pay every month.
Benefits of Personal Loan Balance Transfer
- Better Interest Rates
- Top-up loan facility
- Better Services
Better interest rates: If your current bank is not willing to reduce the rate of interest on your personal loan, it will be wiser to transfer the loan to a bank willing to offer lower interest rates.
Top-up loan facility: Balance transfer renders you the option of increasing the loan amount. You can take a top-up loan rather than applying for a new loan to meet your requirements, if any.
Better Services: If you are not satisfied with the services offered by the current bank, you can transfer the balance to a bank offering better services.
It is very easy to transfer personal loan balance to new banks or financial institutions. Everyone should explore this option, at least once during its tenure, to avail of better service and rate of interest.
Personal Loan Balance Transfer Process
Getting loan transferred to another bank is very simple. You have to get in touch with your current bank to get a quote about outstanding principal amount, tenure completion date, rate of interest applicable currently and on whose name the demand draft has to be made. Then you need to approach the new bank or NBFC and complete the same formalities you did for the earlier loan.
For salaried employees:
- 3 months’ salary slips
- 3 months’ bank statements of the account in which salary is credited
- Identity proof
- Address proof
- PAN Card
- KYC documents
- 2 photographs
For self-employed individuals:
- TAN Card
- Balance Sheet and Profit & Loss Statements, with relevant annexures and schedules, from the last 3 years
- Current Account statements of the business
- Savings Account statements of the individual
Every bank carries out credit worthiness assessment, which will include your credit history and account details. If you have been regular with repayment, and your debt has not increased, your application for loan transfer will be accepted.