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Car Loan Balance Transfer

Car Loan Transfer

Last Updated 28th May 2022

Interest rate 8.65% - 20.00%
Loan Tenure Maximum 7 years
Processing Fee 0.20% - 5.00%
Lowest EMI per Lakh ₹ 2,059
  • Car loan transfer is a process to transfer the car loan account from one bank to another at a lowest interest rate starting at 8.65%.
  • Car loan balance transfer allows you to take advantage of a lower interest rate and bring down the EMI.
  • Opt for a car loan balance transfer if you are paying an EMI which is significantly higher than ₹ 2,059 per lakh of loan amount.
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What is a Car Loan Transfer?

Car loan balance transfer is a facility to transfer the outstanding car loan balance from an existing bank to another bank at lower interest rates. If you are paying a higher interest rate on your loan than the market rate, then you can opt to transfer your loan to another bank that offers more flexibility at lower rates. Before making a decision there are few things which a borrower should keep in mind like what he/she is gaining from the transfer, are they eligible for transfer, assess quality service of a new lender etc.

What are the Benefits of Transferring Car Loan?

The advantages of transferring a car loan are:-

  • Get a lower interest rate as low as 8.65% per annum.
  • With a low interest rate, save on interest and get reduced EMIs.
  • A borrower can avail of better loan features like Nil processing fees, prepayment terms, etc.
  • Option to get top up on an outstanding loan where you can get additional loan amount if need extra credit.
  • Most of the banks offer balance transfer options like SBI, Bajaj Finserv, HDFC, Axis Bank and others.

Eligibility Criteria for Car Loan Balance Transfer

Eligibility criteria for a transfer of car loan to another bank will be different for every bank, but the standard criteria are as follows:-

  • An applicant must have a running car loan from another bank.
  • A borrower must have paid 6-12 Equated Monthly Installments (EMIs) of the car that he/she owns or 1-5% of the outstanding principal.
  • Borrowers should earn a minimum of ₹ 20,000 per month.
  • Credit score should be 700 and above.

Car Loan Balance Transfer Process

Follow the below-given steps to transfer a car loan to another bank:-

  • Identify a low interest rate car loan offer: The first step is to identify the bank which is offering a low rate of interest on a vehicle loan and to which you want to transfer the loan. Calculate your potential interest savings once you get a final rate offer from the bank.
  • Calculate the cost of transfer: The second step is to estimate the cost of a car loan transfer which primarily includes processing fees and prepayment charges you will have to pay to your existing bank.
  • Calculate your savings: Next step is to calculate your net benefits or net savings if you opt for transfer by deducting the cost of transfer from the potential interest savings. If your potential net benefit is significant, then proceed with the transfer process.
  • Apply for a car loan at a new bank: Fourth step is to apply for a car loan at a new bank, Submit your loan documents with a complete repayment record.
  • Get NOC from existing bank: In parallel to fourth step, apply for a NOC and foreclosure letter from your existing bank which is required to be submitted for loan processing and sanction
  • Sign loan agreement and get disbursement: Obtain sanction letter and execute new loan agreement with the new bank. Take disbursement from the new bank by way of cheque/ demand draft in favour of the existing bank and also deposit the same.

Car Loan Transfer Charges

The charges involved to transfer a car loan to another bank vary for every bank depending upon the existing lender and a new lender. The two essential charges which are incurred foreclosure charges and processing fees:-

  • Foreclosure charges: Foreclosure charges are also known as pre-closure charges which are to be paid by a borrower to the existing lender at the time of balance transfer. A lender incurs the charges to cover the lost interest due to closing the loan account before time. The foreclosure rate for every bank is different and generally ranges from Nil to upto 5%.
  • Processing fees: Processing fee is paid to the new bank to process the car loan application which ranges upto 2% of the balance transfer amount.

Documents Required for Car Loan Transfer

Documents requirement by every lender is different, but the general set of documents required by the lenders in general are:-

  • Identity Proof: Aadhar card, PAN card, Passport, Driving License, Voter ID
  • Address Proof: Electricity bills, Gas bills, Water bills (latest), Passport, Driving License, office address- lease/ownership/rent certificate
  • KYC Documents: Aadhar card, PAN card
  • Income Proof Last six-month bank statement, three months salary slip, certificate and proof of business existence, business profile
  • Passport size photographs

FAQs

Is balance transfer a good idea for a car loan?

A car loan balance transfer is a good idea if you think that your expenses will be reduced. A transfer car loan to another bank is available for all types of cars like a hatchback, sedan, SUVs and luxury cars.

Can car loan be transferred to another person?

Yes, you can transfer the car loan to another person, but for that, you need to surrender the ownership of the car.

Which bank is best for car loan balance transfer?

The bank that allows car loan balance transfer and has easy eligibility criteria is best for transfer. The lowest rate for car loan transfer is 6.50% offered by Axis Bank and can be the best option.

What is a car loan take over?

Car loan take over is just another word for car loan balance transfer which means that a borrower can transfer a loan to another lender if they get a better interest rate later.

Do I require a guarantor for car loan transfer?

No, you do not require a guarantor to transfer a car loan to another bank. All you need to do is submit a particular set of documents like identity proof, KYC documents, address proof, bank statements, and passport-sized photographs.

When should I avail the car loan balance transfer?

You should avail car loan balance transfer if the other lender offers the lowest interest rate, special features, better repayment conditions, and the overall loan cost.

When should I not consider transferring my car loan?

You must not switch if one of the following situations is applicable:-

  • A prepayment penalty is payable to the current bank – this is valid in case of fixed-rate loans
  • The balance period of your existing loan is less than two years

Is it possible to merge two existing loans through balance transfer?

Yes, it is possible to merge two existing loans into a single loan account through a balance transfer, and it also helps to get a lower interest rate.

How much time will it take to transfer my car loan from the existing bank?

It might take 15-20 days to transfer a car loan from an existing bank account to a new lender.


Car Loan Reviews 4.3/5  by 29 customers
MyLoanCare Service
4.4/5.0
Banks Service
4.3/5.0
Sellamuthu P, Namakkal
Reviewed on 08th Sep 2018
4 / 5 stars
HDFC Bank Car Loan Availed in Aug 2018

Fast processing, easy documents collection, interest rate is reasonable, repayment options need to iRead more...

Nimish Goswami,
Reviewed on 19th Jul 2018
5 / 5 stars
HDFC Bank Car Loan Availed in Jul 2018

Mr. Sudhir Kumar helped so much and has great knowledge about market.Read more...

Sinto Jacob, Trichur
Reviewed on 23rd May 2018
5 / 5 stars
HDFC Bank Car Loan Availed in May 2018

applied car loan through myloancare. it was fast processing and got the amount without any delayRead more...

Shiv Machaiah, Bangalore
Reviewed on 16th Mar 2018
5 / 5 stars
Axis Bank Car Loan Availed in Jan 2017

My Loan Care person was quite helpful and gave information in detail. Read more...

Arnav, Ghaziabad
Reviewed on 07th Jan 2018
4 / 5 stars
SBI Car Loan Availed in Dec-18

I got fast processing on my application. All charges were normalRead more...

Krishna Yadav, Guwahati
Reviewed on 30th Nov 2017
3 / 5 stars
ICICI Bank Car Loan Availed in Oct-18

Got over 9% interest which was okay. There was a delay in disbursalRead more...

Mohamed Yunus, Pondicherry
Reviewed on 22nd Nov 2017
5 / 5 stars
HDFC Bank Car Loan Availed in Nov 2017

Good and fast service, door step documents collection.Read more...

jagmal singh makwana, Banswara
Reviewed on 02nd Nov 2017
5 / 5 stars
HDFC Bank Car Loan Availed in Oct-17

HDFC Bank finance is good. I like good service and fast processing.Read more...

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Car Loan News - May 2022
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*Terms and conditions apply. Credit at sole discretion of lender, which is subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and collected from public sources. Read More
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