A personal loan balance transfer is a process, where you can easily transfer your existing personal loan to another lender offering a lower rate of interest on the outstanding amount. The primary objective for the existence of a Balance Transfer is to lower the burden of an outgoing installment amount.
Let’s take an example to better understand the concept.
Suppose, Mr. A has an ongoing personal loan from IIFL Bank at 16%. He has already paid 6 installments of the loan. Now one of his colleagues educates him about Fullerton India’s loan ,that is being offered at 11.99%. The difference in the outgoing installment amount is substantial and hence Mr. A decides to transfer his existing personal loan with Fullerton India. He pays the foreclosure amount and transfers his loan. In this way, he will save money and you can also.
Just like Mr. A, you can also save on the extra amount which you are paying as debt, by transferring the outstanding loan amount at a lower rate of interest.
Eligibility criteria for Balance Transfer
If you are planning to transfer your outstanding loan amount to a different lender to save some money, you will have to check if you are meeting the eligibility criteria for the same. The eligibility criteria of personal loan balance transfer vary from one lender to another.
- The new lender evaluates the record of the existing loan, whether all the instalments have been timely paid or not. You need to ensure that there should not be any missing payments.
- Generally, the personal loan eligibility criteria includesthat the current outstanding loan amount should be a minimum of Rs 50,000 to initiate the process.
Generic documents required for Personal Loan Balance Transfer
- A self-attested copy to be submitted for Personal Loan balance Transfer for
- Application form duly filled & signed.
- Last 3 months salary slips
- Latest bank statement showing salary credits for at least 3 months.
- Identity proof (Driving Licence/Aadhaar Card /Passport/Voter ID)
- Current address proof (Driving Licence/Aadhaar Card /Passport/Voter ID/Utility bill/Rent agreement)
- Request letter for transfer of Loan from the External bank to ICICI Bank.
- Track of the existing personal Loan.
- Application copy for closure request or pre-closure letter of the current personal loan.
Lastly, you will have to meticulously analyze the foreclosure charges, processing fee which the new lender will charge, and if applicable the stamp duty to save on the total interest payable.
Originally published at https://ajit-samalafinoz.blogspot.com on October 12, 2020.