Updated on - 20 June 2024 

Personal Loan Balance Transfer

While personal loans come with a ton of benefits, the interest rates are generally on the higher side. And if you have availed multiple personal loans at the same time then paying all of the EMIs at the same time might be burning a hole in your pocket.

In such situations, a personal loan balance transfer can be a great option.

What is a Personal Loan Balance Transfer?

A personal loan balance transfer refers to transferring the outstanding balance in your existing loan from one lender to another. This is due to better conditions offered by the second lender. 

It could be a lesser rate of interest, longer repayment tenure, better prepayment conditions, better service from the lender, etc.

Balance transfers can be done on all kinds of loans like personal loans, car loans, home loans, etc.

Features of Personal Loan Transfer

As the term suggests, loan transfer indicates transferring your existing loan from your current lender to a new one. If you are searching for some features and benefits of a balance transfer personal loan, they are listed below - 

• Lower interest rate as compared to the previous loan

• Fresh loan offer to pay off all existing debts

• Better EMI options for easy repayment

• Loans up to 100% of existing loan amounts

• No collateral required

• Minimal documentation

To save some funds while transferring your loan, you need to note the following factors - 

• The interest rate must be lower than what you were paying previously

• Foreclosure charges of your previous loans should not be very high

• Repayment tenure must fit your requirements

Banks and NBFCs that Offer Personal Loan Transfer

Most major banks and NBFCs offer personal loan balance transfer services. Here is a list of the top banks and NBFCs along with the interest rates they offer -

Note: Rates mentioned as of 3rd June 2024, and can be revised by the bank without any notice. Please check with the bank before transferring your personal loan.

Eligibility Criteria for Personal Loan Balance Transfer

The eligibility criteria for a loan transfer will vary depending on your lender. 

In case you choose instant personal loans from Moneyview to carry out a loan transfer, here are the criteria you need to meet - 

• Your age must be between 21 and 57

• If salaried, your minimum in-hand income must be Rs.13,500

• If self-employed, your minimum in-hand income must be Rs.15,000

• Your income should be directly credited to your bank account

• Your minimum CIBIL or Experian score should be 650

How to Apply for a Personal Loan Balance Transfer?

You could apply for a loan transfer with any financial institution, a bank where you have your savings account or an NBFC. Here are the steps you need to follow - 

STEP-1: Thoroughly research which bank, NBFC, or instant loan app you will take the loan from.

STEP-2: Approach the lender and apply through the online or offline process.

STEP-3: Submit the required documents so that they can be verified.

STEP-4: Once the documents are verified, sign the loan agreement.

STEP-5: After the loan agreement has been submitted, your funds will be disbursed to your account shortly.

Advantages of a Personal Loan Balance Transfer

If you are wondering why you should opt for a personal loan balance transfer online, here are some of the advantages of a personal loan balance transfer -

• Possibility of a Lower Rate of Interest

The biggest advantage of a personal loan balance transfer is that you could get a loan with a sufficiently lower rate of interest which could translate into bigger savings.

• Ability to Avail a Top-up Loan Along with Balance Transfer

Many lenders also allow the applicant to apply for a top-up loan along with a loan transfer. This is helpful as you wouldn’t have to go through the entire process of applying for a loan again.

• Availability of Better Terms and Conditions

The terms and conditions associated with a loan vary between lenders. A personal loan balance transfer might be your chance to opt for a lender whose service is better or has better terms and conditions.

How Personal Loan Balance Transfer Affects Your Repayments - An Example

A personal loan balance transfer can sound confusing, thus, we will try to understand it with an example. Let’s consider that you have taken a loan of Rs.10 Lakh from a lender with a tenure of 5 years at an interest of 16.00% p.a. So, this is what your loan repayments will look like - 

• EMI: Rs.24,318

• Total interest amount: Rs.4,59,083

Suppose after paying the EMIs for 12 months, you find another lender who is offering an interest rate of 10.00% p.a. If you decide to transfer the personal loan balance to the new lender, this is how your loan repayments will look like -

• Balance: Rs.9,19,966

• New EMI: Rs.23,333

Your total savings will amount to Rs.44,325, because of the lower interest rate.

The same information is illustrated below in the table -

Conclusion