A loan balance transfer refers to the process of transferring your outstanding loans to a new lender. You can exercise this option if you aren’t satisfied with your current lender.
Here is everything you should know before deciding on a loan balance transfer
1. Home loan balance transfer
Loan transfers are done to pay off the amount within the stipulated tenor (one that is best suited for you). So, you need to verify any extra costs and other latent charges associated with it first.
For example, if your loan has a fixed rate of interest or is approaching the scheduled repayment date, not opting for a transfer would be wiser. It is because transfer charges tend to be higher in such cases, and the savings you make would not justify the effort of transferring your home loan balance.
Additional Read: Know about home loan balance transfer
2. Personal loan balance transfer
Personal loans can be used to finance anything, from an annual family vacation to a surgery that cannot be put off for tomorrow. A personal loan is usually a borrower’s go-to financial product for loan transfer as well.
These loans are unsecured and easy to avail of, even more so with the pre-approved offers from Bajaj Finserv. You just to share a few details to get your offer. However, they also typically come with high-interest rates, which could spoil your repayment plans. Hence, a balance transfer would shelter you from these unflattering rates of interest.
3. Credit Card Balance Transfer
Many a time, you may have accumulated hefty dues on your credit card. This may happen if you had to pay for medical expenses during an emergency. Now, you may be finding it difficult to pay your outstanding debts.
In such cases, transferring your credit card debt via a balance transfer credit card can be beneficial. Balance transfer credit cards come with a low to zero rate of interest for a specific period, ranging from 3 to 12 months. Therefore, transferring your balance to a new card can help you repay the dues without any hassle.
When you opt for a balance transfer facility, you will not be subjected to high financial charges (interest rates) and late payment fees from your previous credit card.
How will a Loan Balance Transfer Benefit You?
Transferring your loan comes with several benefits, including:
Favorable interest rate: Only if the new lender levies a reduced rate will it make sense to transfer the outstanding principal. Doing so relieves your debt burden by bringing down EMI payouts and making it easier to pay off the loan.
Lucrative add-ons: If you have been consistent with your EMIs at the previous bank/ NBFC, the new lender might offer you a much lower interest rate and impose minimal transfer charges.
Top-up loan: If you have an error in calculating your financial obligations initially, you may get a top-up loan (over and above the existing loan) from your new lender that can be extended at a revised rate of interest to help meet your objectives.
Better back-end services: Sometimes, bad customer service could be the only reason you to want to discontinue your association with a particular lender.
Documents Required for a Loan Balance Transfer
- No Objection Certificate (NOC) from the original bank
- Proof of identity
- Age proof
- Proof of residence
- Income proof
- In the case of salaried employees: Bank statement (preferably over the last six months)
- In case of self-employed individuals: ITR (preferably over the last three years), bank statement (last one year), P&L statement
- Form 16 (TDS certificate)
- Loan statement copy
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