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Personal Loans can be a financial lifesaver as it offers quick disbursal of funds in terms of urgent needs from medical emergencies to home renovations. However high interest rates can sometimes be overwhelming.
With a Personal Loan Balance Transfer, borrowers can transfer their existing Personal Loan to another bank or Non-Banking Financial Ccompany such as TVS Credit and enjoy better terms.
Let’s navigate through the process of Balance Transfer Loan.
What is a Balance Transfer Loan?
A Balance Transfer is basically a method whereby a borrower moves or transfers the existing loan amount from the current lender to another lender who is offering better terms and conditions including a lower interest rate.
This financial tool helps the borrower to relieve from the money related troubles by decreasing the monthly EMI amounts and makes the loan repaying repayment procedure easier. By getting the loan at a lower rate of interest, the borrower can easily reduce the total interest outgo during the loan period and save a lot of money.
Moreover, the new lender also provides (if needed) flexible terms and conditions like higher loan tenure or flexible EMI options which the borrower can choose as per his financial requirements and preferences. This helps the borrower to overcome financial crunch that helps in improving his financial habits and debt recovery ratio.
What is a Personal Loan Balance Transfer?
Transferring the remaining balance of a Personal Loan from one lender to another, also known as a Personal Loan Balance Transfer, can be a pretty practical financial move. When you make this transfer, it’s usually because the new lender offers lower interest rates. This means you can lower your monthly payments, which makes it easier to handle your loan repayments.
But it gets even better!
By switching lenders, you end up paying less in interest overall throughout the life of the loan. And that can really take the pressure off your wallet and make it simpler to manage your monthly budget. Plus, it’s a great way to save some extra cash in the long run. So, if you’re looking to reduce your debt in a more effective way, a Personal Loan Balance Transfer might just be the answer you’ve been searching for.
Benefits of a Personal Loan Balance Transfer
A Personal Loan Balance Transfer offers several key benefits to borrowers-
- Low interest rates: The biggest advantage is having a chance of a reduced interest rate, which saves you a lot of money over the term.
- Lower EMI: When the interest rate goes down, monthly EMIs decrease thereby reducing financial pressure on borrowers
- Better terms: Borrowers can avail better and different terms like increased repayment flexibility or an elongated tenure
- Top-up loans: On opting this facility, some lenders offer borrowers above existing loan amount giving them extra funds if necessary
- Credit score improvement: One can improve their credit score over time by paying lower EMI’s consistently
Visit our page to know more about our TVS Credit Personal Loans and the benefits associated with it..
Eligibility criteria for a Personal Loan Balance Transfer
One must meet these criteria before applying for a Personal Loan Balance Transfer:
- Good credit score: Lenders prefer borrowers with credit scores above 700 most of the times
- Stable income: Proof of income needs to be constant so that the person can pay back their loan
- Completing a minimum loan tenure: The lender often asks for EMI repayments over 12 months on the borrower’s existing loan to qualify
Documents Required for a Personal Loan Balance Transfer
It is advised to have the following documents handy before applying for such a loan –
- Identity Proof: Aadhar card, PAN card, passport etc.
- Address Proof: Utility bills, rental agreement etc.
- Income Proof: Salary slips, bank statements, income tax returns etc.
- Existing Loan Documents: Sanction letter, repayment track record and loan statement from the current lender are required.
How Does a Personal Loan Balance Transfer Work?
These steps are involved in Personal Loan Balance Transfer process:
- Research and compare: Start by researching different lenders comparing interest rates, fees and terms
- Eligibility check: Make sure you satisfy the eligibility requirements of the newly identified lender
- Application: Apply for a balance transfer by submission of required documents
- Approval: Once you receive an approval from the new lender, they will pay off your old outstanding amount to your existing bank
- New loan agreement: This is followed by renewal with new lender you selected
Now that you are aware of the different aspects and features of Personal Loan Balance Transfer, let’s answer a few frequently asked questions to give you a better understanding.
FAQs –
Is Personal Loan Balance Transfer a good idea?
Yes, if you are able to get a lower rate of interest, pay less EMI or able to get better terms.
Can we transfer Personal Loan from one bank to another?
Yes, Personal Loans can be transferred from one bank to another bank or NBFC which offers better terms.
Does balance transfer affect credit score?
No, balance transfer doesn’t affect credit score. However, loan enquiry from various lenders may affect your credit score temporarily.
What are the drawbacks of balance transfer?
Processing fee, prepayment penalty, if any, from existing lender and may not get better terms are some of the things to look out for.
What will be EMI, if I transfer the personal loan?
New EMI will be dependent upon the interest rate and loan tenure offered by the new lender. Ideally, it should be less than the existing EMI if the rate of interest is lowered.
Does Personal Loan need any collateral?
No, Personal Loan is an Unsecured Loan and does not need any collateral.
How many days will it take to get my Personal Loan approved?
It totally depends on the lender, at TVS Credit, it usually takes less than a day to get the loan processed, depending upon the verification process.
Can repayment tenure change in Personal Loan Balance Transfer?
Yes, it may be extended or reduced depending upon the new lender’s terms and conditions. This facility offers flexibility in repaying the loan.
What are the interest rates if I transfer the Personal Loan?
The rate of interest in the case of balance transfer varies from lender to lender and depends on your credit score, loan amount, and loan tenure. It usually ranges between 10% to 20% per annum.
Personal Loan balance transfer is a great financial strategy if utilized in a correct manner. If you are transferring your existing loan to a lender who offers better loan terms, then you can reduce your monthly outflow, lessen the interest outgo, and get better loan conditions. Therefore, before going ahead with a balance transfer loan, research well, compare the terms and conditions and check whether you are eligible or not.
Download the TVS Saathi app today, to check your eligibility and process loan faster and hassle-free.
