A personal loan is a great source of help as the lenders provide you with financial assistance without asking for any sort of collateral. Further, these loans are also great due to the fact that you can make use of the money to relieve any of your financial problems such as funding your vacation, wedding expenses, medical bills, debt consolidation, etc. However, the interest rates charged by the lenders for a personal loan are quite high as compared to most of the other loan products. But now the financial institutions have started providing personal loan balance transfer through which you can transfer the existing amount of outstanding debt from your existing lender to another.
In the earlier days, the concept of balance transfer was limited to the transfer of credit card debt. However, with the evolution in the lending segment; now the financial institutions have started allowing personal loan balance transfer, transfer of home loan account, motor loan, etc.
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Why you should opt for a personal loan balance transfer?
There are a number of reasons why you should opt for a personal loan balance transfer, and they are here as follows:
Personal loan interest rates: A transfer of balance is extremely helpful for the people who seek to reduce their burden of debt. The reason being, when you transfer your personal loan balance transfer from your existing lender to another; you are offered lower interest rates by the new bank or NBFC (non-banking financial company).
Repayment tenure: The highlight of opting for a personal loan through a new-age financial institution is that you get to repay your loan amount in the flexible form of EMIs (equated monthly installments). These EMIs are calculated on the basis of the principal borrowed amount, interest rates charged by the financial institutions, as well as, the repayment tenure that you opt for. But, there are times, when your existing lender might now provide you with the desired choice of repayment tenure; thus, at such occasions, it is wise to transfer your personal loan balance account.
Services offered: Every lender’s customer service quality differs from the next. Thus, you might choose to opt for a personal loan balance transfer, if you are unhappy with the quality of services offered by your current financial institution.
Who should opt for a balance transfer?
The first thing that you must keep in mind when transferring your personal loan account is that you are doing this to reduce the debt burden. Thus, most likely, the best time to opt for a personal loan balance transfer is when you are in the early stages of the repayment amount. This is the time when you have repaid the outstanding amount to a certain extent; as well as the time when the lower interest rates from the balance transfer will benefit you the most. However, remember that the banks and NBFCs (non-banking financial companies) do look at your repayment history with the current lender. Therefore, ensure that you have made timely repayments on all of your previous EMIs without defaulting.
How to apply for a transfer of your personal loan account?
The process of your personal loan balance transfer is as easy as anything can get. All you need to do is follows these 3 easy steps:
You have to apply for a transfer of personal loan account with your current lender to another bank. After which, your current lender will provide you with NOC (no-objection certificate), a consent letter, and the statement mentioning your outstanding amount.
You have to then submit the documents that you have obtained from your current lender to the bank with which you want your account to be transferred. Further, the new financial institution will scrutinize your submitted documents and approve the request. After which, the new bank will issue the closure amount with your current lender.
Once, all of the transfer formalities have been completed; all of your submitted documents with your current lender will be handed over to the new bank. Also, the other post-dated cheques and ECS that you have provided to your previous lender will become invalid.