Personal Loan Balance Transfer

Personal loan balance transfer helps save money, provides access to more credit, and could increase your CIBIL score
 

When you transfer the outstanding personal loan balance from one bank to another, you are using the personal loan balance transfer facility. It occurs when another bank offers a lower rate of interest on the remaining amount. The main reason for a personal loan transfer is to reduce the interest burden on the remaining amount. Hence, it is important that you carefully assess the personal loan balance transfer offer to save considerably on the total interest payable.

Guide to Personal Loan balance transfer, including its benefits
 

To understand this better, assume that you approached IDFC FIRST Bank for a personal loan transfer. IDFC FIRST Bank will now take over the loan from your existing lender and offer you a similar loan at a lower interest rate. Now, you must pay your future EMIs to IDFC FIRST Bank and not your original lender.

You can also consider transferring your loan if your financial situation has changed. You can also increase or decrease your loan tenure or EMI if your current bank is not accommodating you. Check our Personal Loan EMI Calculator.

How does Personal loan balance transfer work?
 

When you opt for a personal loan balance transfer, IDFC FIRST Bank will pay off your existing loan. If you have any other payment clause, then you might have to incur those charges, along with the processing fee for your new loan. Since you will save a lot with a lower rate of interest, these charges will not hurt your wallet. Now you know what a personal loan balance transfer is and how it works, keep reading to find its benefits for you.

The benefits of Personal loan balance transfer
 

 A personal loan balance transfer comes with various advantages such as:

Better rate of interest
 

One of the biggest benefits of a personal loan balance transfer is that the rate of interest becomes less. This ultimately lowers the borrower’s interest burden. The new lender will offer a lower rate of interest on the loan transfer, which benefits the borrower. While there is a possibility that your new bank increases the rate of interest, most banks, including IDFC FIRST Bank, will reduce the interest after assessing your background.

Extended duration on the loan
 

When a personal loan transfer from one bank to another is carried out, the tenure of the existing personal loan is negotiated upon, and you can get the repayment period of the loan either extended or reduced. The EMIs and interests can increase and decrease according to the negotiations.

Added features
 

This benefit depends on your past payment record, your CIBIL score and the income dynamics. Some lenders may provide loftier features, such as zero processing fees, a lower rate of interest, a waiver of the last EMI, and so on. The personal loan balance transfer facility cannot only reduce the personal loan interest burden, but the borrower may also get better loan features.

Increment of loan facility
 

Most banks allow a top-up facility along with the personal loan balance transfer. Many banks and financial institutions offer new loans and top up facilities for personal loans at competitive and lower interest rates.

With many benefits and the ability to reassess your financial future in terms of your loan repayment, a personal loan transfer from one bank to another can be of great help. With IDFC FIRST Bank, you can enjoy a lower rate of interest in your existing personal loan.

Factors to consider before opting for a personal loan balance transfer
 

A personal loan balance transfer can be a strategic move for debt management, but it requires careful planning.

Interest rate: A loan refinance won't make sense to switch to another lender if the interest rate is higher, as this will increase your debt burden. Thus, it should be lower than what you currently pay. Lower rates mean lower monthly payments and a faster debt payoff.

Terms and rules: Evaluate the terms and conditions for a personal loan balance transfer set by your new lender. If you have a strong credit profile, leverage it to negotiate better terms like a waiver on your last EMI and lower processing costs. Simply put, look for offers that give you more flexibility and savings in the long term. Also, consider any prepayment fees you might incur from your current lender.

Loan tenure flexibility: Examine how your new lender allows you to select the loan's duration. While extending your loan tenure can lower your EMIs, it increases the total interest. So, tailor the loan length that balances low EMI payments to help you repay the loan faster while minimising the total interest you pay over the loan term.  

Cost of transfer: Fees often accompany the transfer process. Make sure to calculate the cost of transferring your loan to get an accurate idea of how much you stand to save from the personal loan balance transfer. Also check additional costs and penalties (if applicable). These fees need to make sense to the overall plan of your debt repayment plan.  

Eligibility criteria for a personal loan balance transfer
 

With IDFC FIRST Bank, not only do you benefit from competitive interest rates, but you also experience an easy and entirely digital transfer process. These are the requirements you must fulfil to qualify for a personal loan balance transfer:

For salaried individuals:

• Minimum Age: 23 years
• Maximum Age: 60 years or retirement, whichever comes first at the time of loan maturity

For self-employed individuals:

• Business existence: Minimum 3 years
• Minimum age: 25 years[HK2] 
• Maximum age: 65 years at loan maturity

Documents required for a personal loan balance transfer
 

Get an instant personal loan and transfer your balance digitally.  The required documents include:

• Valid KYC (Know Your Customer) documents:  Passport, voter's identity card, driving licence, Aadhaar letter/card, NREGA card, Letter issued by the National Population Register.
• RBI Approved Account Aggregator Process/ Bank Statement
• Net banking or debit card details to set up e-Mandate
• eSign/eStamp for faster disbursal

A personal loan balance transfer or loan refinance can help you save money, consolidate debt, get better repayment options, and ultimately make it easier to manage your finances. The key to maximising these benefits is thorough research, careful consideration of terms, and a clear understanding of your financial objectives.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.