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Personal Loan Balance Transfer to SBI, HDFC, Axis, ICICI Bank, Bajaj

Personal Loan Balance Transfer

Last Updated 01st Nov 2020

Existing personal loan borrowers should consider Personal Loan Balance Transfer to another bank, if they are paying 0.5% to 1% higher interest rate on current personal loan rates in India or are looking to avail a personal loan top up. Balance transfer on personal loan is available at interest rates starting @10.45%. Check Best Offers

Bank NamePersonal Loan Balance Transfer interest Rates
HDFC Bank10.75%
Yes Bank10.45%
Citibank11.99%
ICICI Bank13.25%
Tata Capital11.25%
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    What is Personal Loan Balance Transfer?

    Personal Loan balance transfer is an option available to the borrower to transfer his loan from one bank to another to take advantage of the lower interest rate offers and get top up loan. The two primary reasons to take personal loans are to save interest and also get additional loan on your existing loan amount. The decision to transfer your loan is dependent on how much cost you are paying on your existing loan.

    Personal loan BT do not require any collateral from the borrower. However, the current lender may levy some foreclosure charges, and the new lender would charge some processing fee along with stamp duty for the loan agreement, in case applicable. Include these costs too, while evaluating the best balance transfer offer.

    Features of Personal Loan Balance Transfer

    Special features of Personal loan balance transfer facility and process are as described below:

    • Low rate of interests: With personal loan balance transfer facility, you can avail your existing personal loan with an affordable interest rate. Thereby, you can always reduce the burden of an existing personal loan even when you have availed it a higher interest rate previously.
    • Flexible repayment tenure: The balance transfer facility on personal loans not only helps you in availing a lower personal loan rate but also helps you in restructuring the repayment tenure. By extending the loan repayment tenure, you can easily reduce your personal loan burden, as the EMI is split over a number of years. Similarly, you can get rid of the personal loan in a shorter period by reducing the loan tenure.
    • Top-up facility: The personal loan balance transfer facility is accompanied by a top-up facility, wherein you can get your loan amount revised in need of extra credit. Various personal loan lenders provide the top-up facility at concessional rates, in case you avail the balance transfer facility.
    • Minimal documentation: The personal loan balance transfer and top-up facility involve an already existing loan; thereby, it involves minimal documentation. This is because the KYC and verification of the documentation have been done by the previous lender already.

    Savings on Balance Transfer

    Suppose, you have an existing personal loan outstanding amount of ₹ 2 Lakh for a tenure of 48 months. You can transfer your existing personal loan to a new bank at lowest interest on personal loan. By transferring a 4 year personal loan of ₹ 2 Lakh from 14.5% to 10.45%, your EMI can reduce from ₹ 5,516 to ₹ 5,116. Total savings on interest after balance transfer is ₹ 19,188.

    Illustration of Interest Savings with Balance Transfer

    Existing Loan New Loan
    Balance Outstanding₹ 2 Lakh₹ 2 Lakh
    Rate of Interest (ROI)14.5%10.45%
    Loan Tenure Remaining (months)4848
    EMI₹ 5,516 ₹ 5,116
    Monthly Reduction in EMI ₹ 400
    Total Savings ₹ 19,188

    What are the eligibility criteria for a personal loan transfer to a new lender?

    To transfer your personal loan from one bank to another, you have to meet certain eligibility criteria. The eligibility for personal loan balance transfer depends on your repayment capacity to repay the loan and your creditworthiness. Some of the common key criteria are as following:

    • Applicant must have a running personal loan from another bank
    • Outstanding Loan amount should be at least ₹ 50,000 for balance transfer process.
    • Clean EMI payment track record of at least 12 months is required for personal loan transfer.
    • CIBIL Score required as per bank policy, typically 700 and above.

    Personal Loan Balance Transfer Process

    The process to transfer your loan from one bank to another is easy and involves the following steps:

    • Identify a low interest rate personal loan offer: First step is to identify the bank which is offering a low rate of interest on personal 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 of personal loan: Second step is to estimate the cost of loan transfer which primarily includes processing fees and prepayment charges you will have to pay to your existing bank.
    • Calculate your savings: Third 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 personal loan at new bank: Fourth step is to apply for quick personal loan at new bank, submit your loan documents with 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 new bank by way of cheque/ demand draft in favor of existing bank and deposit the same with the existing bank. On receipt of loan outstanding, your existing bank will cancel all the cheques and ECS and close your loan account.

    Personal Loan Transfer Charges

    Charges to transfer your personal loan can be different depending on your existing bank and the new bank. Key charges for loan transfer include foreclosure charges to be paid to your existing bank and processing fees.

    • Foreclosure charges are payable to existing bank for take over of personal loans. These rates can vary bank to bank from nil to up to 2%.
    • Processing fees are payable to the new bank on transfer and may range from a flat fee ₹ 999 to up to 2% of the loan amount. However, banks offer discount on processing fees from time to time and you should check for attractive offers with marketplaces like MyLoanCare to get best personal loan balance transfer offer.

    Personal Loan Balance Transfer Calculator

    With MyLoanCare Personal Loan Balance Transfer Calculator, you can calculate your loan amount eligibility and also identify offers with lower personal loan rates compared to your existing personal loan rates. Do complete market research before you choose the bank to transfer your loan to and apply for a balance transfer in terms of current interest rates, processing fees offers, personal loan top up schemes from various banks.

    Documents Required for Personal Loan Transfer

    • Filled application form with passport size photograph duly sighed
    • Identity and age proof ( PAN card / passport, driving license/ Aadhaar card/ voter id card)
    • Address proof (Electricity bill/ telephone bill/ Aadhaar card/ rent agreement)
    • Last 3 months salary slip, and last 6 months bank account statement
    • Personal loan statement of loan to be transferred

    FAQs

    Who can avail the balance transfer and top-up of personal loan?

    Any borrower with an existing personal loan on which he or she has paid at least 12 EMI’s regularly are eligible to balance transfer their loan to another bank and also avail top up loans at the time of loan transfer.

    When should I avail the personal loan balance transfer?

    In case you are paying an interest rate on your personal loan which is higher than those available in the market and the difference is more than 0.5% to 1%, you should consider the option of transferring your loan to a new bank.

    What is the time duration for transfer of loan?

    Your loan transfer formalities like getting NOC, foreclosure letter, applying and getting a sanction from new bank and getting the loan balance transferred to new bank can take up to 4-8 days.

    Do I have to submit any security or collateral for personal loan transfer?

    No, there is no need for security or collateral for personal loan transfer.

    What is the loan tenure for the balance transfer of personal loan?

    The repayment period for loan is around 12 to 60 months i.e. 1-5 years.

    What are charges on the transfer of loan?

    Apart from rate of interest, other charges include:

    • Processing fee payable to new bank
    • Pre-payment or foreclosure fee payable to existing bank
    • Stamp duty on loan agreement in some states

    Is a personal loan balance transfer a good idea?

    Availing the personal loan balance transfer facility provides a number of benefits such as lower interest rate, flexible repayment tenure, and top-up facility. Apart from that, the facility can help you avail a better customer service if you are not satisfied with the services offered by your current personal loan lender.

    Which Bank is best for a personal loan balance transfer?

    A number of banks offer a personal loan balance transfer facility. Amongst all, Yes Bank offers the lowest balance transfer rate currently of 10.45%.

    Is personal loan transferable?

    Yes, a personal loan is transferable from one lender to another via the balance transfer facility. Through this, you can change your personal loan lender and switch to one offering a lower interest rate.

    How do I transfer my personal loan to another bank?

    You can transfer your personal loan to another bank by switching to a different lender offering a lower interest rate. This begins by shortlisting the list of banks offering the lower rates than the current lender, and by further making a comparison on the basis of customer service and other charges such as processing fee, balance transfer fee, etc. On deciding the new lender apply for the balance transfer facility and submit the required documents, including the NOC certificate.


    Personal Loan News - Nov 2020
    • 2020-10-30 : AU Small Finance Bank Q2 net profit up 87%
      AU Small Finance Bank net profit in the September quarter of the current fiscal year rose by 14% to Rs 196 crore. The Bank had reported a net profit of Rs 172 crore for the corresponding quarter of 2019-20. Deposits which includes fixed and recurring deposits increased by 22% to Rs 26,980 crore. In addition to this, advances which include retail loans like home, personal, car, two-wheeler and gold loans along with business and mudra loans were up by 10% to Rs 27,233 crore.
    • 2020-10-30 : Axis Bank reported a net profit of ₹1,623 crores in Q2
      Axis Bank reported a net profit of ₹1,682.67 crores in the Q2 of FY21, as against a loss of ₹112 crores in the same period last year. The net interest income increased 20% y-o-y to ₹7,326 crore and its net interest margin (NIM) stood at 3.58%. Further, retail loans which include home, personal, gold, two-wheeler, gold and car loan grew 12% y-o-y to ₹3.05 trillion, accounting for 53% of the net advances of the bank.
    • 2020-10-30 : RBL Bank Q2 net profit surges to ₹144 cr
      RBL Bank reported almost a three times increase in profit in the quarter ended September backed by retail loans like home, personal, car, two-wheeler and gold loans along with business and mudra loans. Further, Net profit rose to Rs 144 crore in the quarter ended September 2020 up from Rs 54 crore a year earlier supported by 23% growth in retail advances year on year even as wholesale advances continued to shrink.
    • 2020-10-30 : Bank of Baroda Q2 profit surges 128%
      Bank of Baroda reported a net profit of ₹1,679 crores for the quarter ending 30 September. Net interest income during the quarter grew by 6.8% to ₹7,508 crores. The consolidated net profit stood at ₹1,771 crores in the September quarter. Further, the advances backed by retail loans like home, personal, car, two-wheeler and gold loans along with business and mudra loans increased by 5.3%. CASA ratio increased to 39.78%, up by 190 bps year-on-year.
    • 2020-10-30 : SBI partners with global education platform edX
      State Bank of India entered into a partnership with global non-profit education platform-edX to offer Massive Open Online Courses on the platform from November 2020. The partnership is aiming to develop skill sets of career-oriented individuals in today competitive world.
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