Just like a personal loan, PLBT does not require any collateral or security to be submitted with the new lender. The few nominal charges to be paid include the foreclosure charges and loan transferring charges to your existing lender. Your new lender may also charge the loan processing fees, along with stamp duty and other fees usually charged on making a fresh personal loan application.
Personal Loan Balance Transfer Interest Rates
The interest rates offered by the new lenders on exercising personal loan balance transfer would usually be lower than the personal loan interest rates charged by your existing lender. Personal loan interest rate offered by the new lender would also depend on your existing outstanding loan amount, loan tenure, credit score, income and other aspects of your credit profile.
Comparison of Personal Loan Balance Transfer Offered by Various Lenders
|HDFC Bank||11.00% onwards||Apply Now|
|ICICI Bank||10.75% onwards||Apply Now|
|Axis Bank||10.49% onwards||Apply Now|
|Kotak Mahindra Bank||10.99% onwards||Apply Now|
|IndusInd Bank||10.49% onwards||Apply Now|
|IDFC First Bank||10.49% onwards||Apply Now|
|Bajaj Finserv||11.00% onwards||Apply Now|
|Tata Capital||10.99% onwards||Apply Now|
Note: Interest rates as of 25 January 2023
Balance Transfer Processing Fees and Charges
You existing lender may charge foreclosure fee of up to 5% on the outstanding loan amount on transferring the personal loan to another, if the original personal loan was availed on fixed interest rates. Lenders would not charge any foreclosure fee in case of personal loans sanctioned on floating interest rates. The new lender will charge a processing fee from Rs. 500 to 4% of the outstanding loan amount during personal loan balance transfer.
Calculation of interest cost savings generated from Personal Loan Balance Transfer
The following table gives you an illustration of how a personal loan balance transfer could help you save on the total interest payable:
|Original Loan Amount||Rs. 5 Lakh||Rs. 10 Lakh|
|Existing Rate of Interest||15% p.a.||15% p.a.|
|Original Repayment Tenure||60 months||60 months|
|EMI already paid||12||12|
|EMI to be paid||48 months||48 months|
|Existing EMI||Rs. 11,894||Rs. 23,789|
|Outstanding Loan Amount||Rs. 4,27,416||Rs. 8,54,819|
|New Rate of Interest||11.50% p.a.||11.50% p.a.|
|New Tenure||48 months||48 months|
|Total Savings||Rs. 35,712||Rs. 71,424|
Benefits and Features of Personal Loan Balance Transfer
- Lower Rate of Interest: One of the primary objectives of exercising personal loan balance transfer is to avail lower interest rate and thereby, reduce one’s overall interest cost.
- Longer Repayment Tenure: Exercising personal loan balance transfer facility can also help a borrower to opt for a longer tenure than the residual loan tenure of his existing personal loan. A longer tenure will reduce then his monthly EMI burden. However, this would lead to a higher interest cost for the borrower.
- Avail Top-up Personal loan: Many lenders offer top-up personal loans to those transferring their existing personal loans. Thus, personal loan balance transfer facility would benefit existing personal loan borrowers unable to avail top-up personal loans or being charged higher interest rates for it.
Also Check: List of Banks Offering Top up Personal Loan
Eligibility for Personal Loan Balance Transfer
Below stated is the basic eligibility criteria for PLBT:
- Age: Minimum 21 years and maximum 65 years
- Salaried Individuals and self-employed professionals
- Existing outstanding loan amount should be at least Rs. 50,000 or defined by the lender
- Clean repayment history
- Minimum 2 years of work experience with at least 1 year with current employer
- Minimum Monthly Income: Rs. 15,000
- CIBIL score: Usually 750 or above
Check Your Free Credit Score to know personal loan eligibility Check Now
Basic documents that the borrower may be required to submit in case he/she wishes to opt for a personal loan balance transfer are as follows:
- Duly signed application form with passport size photographs
- Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
- Age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
- PAN Card copy (Mandatory)
- Address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Rent agreement, etc.)
Additional documents specified to salaried and self-employed individuals are as follows:
For Salaried Individuals:
- Last 6 months’ bank statement
- Salary slip for last 3 months
- Statement of personal loan from a current lender (for the loan that needs to be transferred)
For Self Employed Individuals:
- Business PAN card
- Business address and vintage proofs
- Last 3 years’ Balance sheet along with profit and loss statement pertaining to business
- Last 6 months’ bank statement of individual and business entity
- Statement of personal loan from a current lender (details of the loan that need to be transferred)
Process of Personal Loan Balance Transfer
Personal loan balance transfer process usually involves the following steps:
- Check the current interest rate that you can get on your personal loan with other lenders and calculate the interest savings.
- Evaluate the estimated cost of the loan transfer taking into account various charges and fees that might be applicable.
- Consider the net benefits and finalize whether you want to opt for the balance transfer or not. Shortlist a few lenders that you may want to transfer your existing loan to.
- Compare the interest rates offered by the shortlisted lenders, your loan amount eligibility and their loan process.
- After you finalize upon the new lender and decide to go ahead with the transfer, apply for a NOC (No Objection Certificate) and foreclosure letter from your existing lender.
- Start the application process with the new lender. Submit the loan documents along with the complete record of repayments.
- Get a sanction letter and execute the new loan agreement with the new lender.
- Take a disbursement (of the outstanding loan amount that you had to pay to the previous lender) from the new lender through cheque/ demand draft in favour of the earlier lender.
- Once the previous lender receives the outstanding loan amount, they will cancel all the cheques and ECS and close your personal loan account.
Q. Who can avail the personal loan balance transfer facility?
Lenders offer this facility to existing personal loan borrowers of other lenders matching their loan eligibility criteria.
Q. Does personal loan balance transfer affect credit score?
While exercising the personal loan balance transfer option, the new lender would fetch your credit report to check your creditworthiness. As such lender-initiated loan enquiries are considered as hard enquiries, credit bureaus will reduce credit score by a few points for each lender-initiated enquiry. Hence, opting for a personal loan balance transfer option might reduce your credit score by a few points. However, making personal loan balance transfer applications with multiple lenders within a short span can lead to steeper reduction in your credit score. Hence, instead of making direct loan transfer applications with multiple lenders, visit online financial marketplaces like Paisabazaar.com (lead form) to evaluate various loan options. While such online financial marketplaces would also fetch your credit report, such fetches are considered as soft enquiries and do not impact your credit score.
Q. What is the repayment tenure in case I opt for the balance transfer of my personal loan?
The repayment tenure can range between 12 to 60 months.
Q. Can I avail myself more money by opting for a balance transfer?
Yes, several lenders offer customers the option to avail a top-up personal loan while exercising personal loan balance transfer. Top-up personal loan enables customers to borrow more money over and above their existing loan.
Q. Do I need to submit any collateral or security while applying for a balance transfer?
No, you are not required to submit any collateral or security for applying for a balance transfer, as it is an unsecured loan and the same as personal loan.