Get A Personal Loan At A Low-Interest Rate With Personal Loan Balance Transfer

Posted by Apoorv Chaudhary on December 10th, 2020

A Personal Loan Balance Transfer is a method of moving your outstanding loan amount from one lender to another.  

Benefits of Personal Loan Balance Transfer  

• Longer Tenure of Repayment: A borrower may benefit from improved loan repayment tenure by moving the loan. Higher tenures will reduce the burden of a borrower and make it more economical to repay the loan.  

• Better characteristics: Choosing a personal loan refinancing option will allow you to receive better rates from the new lender, in the form of a lower interest rate, a low processing fee, etc. 

Common Steps of Personal Loan Balance Transfer  

Take a look at the process below if you want to go for a personal loan balance transfer:  

• Check the latest interest rate that you can get and calculate the interest savings on your loan. 
• Calculate the estimated loan conversion rate, including different fees. 
• Calculate the net advantages and determine whether or not you want to move your loan.
• Compare and verify the interest rate offered, eligibility criteria, and the entire loan process. 
• If you want to go through with the balance transfer, apply for a NOC with the existing lender and foreclosure letter. 
• Apply with the new lender for a loan and submit the loan documents with a full repayment record. 
• Obtain a letter of sanction and conduct the revised loan agreement with the new creditor.
• Take the disbursement from the new lender in favor of an existing lender via cheque/ demand draft and deposit the same with the current lender. 
• The current lender will cancel all the cheques and ECS upon receipt of a loan outstanding and close your loan account.  

Personal Loan Balance Transfer Eligibility Requirements  

Generally speaking, the eligibility conditions for a personal loan balance transfer remain the same as a personal loan and differ from lender to lender. Nonetheless, the standard eligibility conditions that most lenders are looking for are listed below:  

Age: The applicant's age at the time of the personal loan application should be a minimum of 21 years and a maximum of 60 years. 

Working experience: A borrower should have a minimum of 2 years of working experience and must work for a minimum of 1 year in the current organization. 

Employment: A borrower should be employed with a private or public sectors organization such as national, state, or local authorities, as a salaried person. A self-employed person should have his/ her own business.  

Income: The applicant must have Rs. 20,000 minimum net income. If he/she resides in Delhi, Mumbai, Chennai, Bengaluru, Hyderabad, Pune, Ahmedabad, Kolkata, and Cochin city metro, the income should be at least Rs. 25,000 per month. 

Personal Loan Interest Rate 

An interest rate that sets the EMI is one of the main elements that come with a personal loan. The fixed interest rate and the floating interest rate are the two primary forms of interest rates. 

In-depth, let's grasp it:  

1. Fixed/ Set interest rate: If you opt for a fixed interest rate personal loan, then you would have to pay the same interest over the loan tenure. For example, if an individual has taken out a 4-year personal loan, the interest rate given by the bank will remain the same throughout tenure. 
2. Floating interest rate: The floating or variable interest rate, on the other hand, is aligned with the marginal cost of the loan rate or the MCLR, resulting in the adjustable interest rate as adjusted by the MCLR.

If you intend to take advantage of a Personal Loan, it is necessary to consider the variables that can affect the interest rate. Two individuals can get a different rate of interest on a personal loan from the same lender, depending on the following factors:  

• Credit score: A strong credit score not only allows you to take advantage of a personal loan, but it also helps to reduce the interest rate. A credit score is a 3-digit number that indicates how the credit card repayments and personal loans have been treated in the past. Points are added to the credit report each time you repay the EMI on time, and defaults or late EMI payments narrow down the credit score by a few points. 

Maintaining a good credit score of 750 or above is critical, as it represents your creditworthiness and presents you as a trustworthy individual in the lenders' consideration of personal loans. You could also be given a lower rate of interest. 

• Income: Since personal loans are collateral-free loans and do not require any protection against them, the lenders should be convinced about your high monthly income. Almost every lender assumes that borrowers with high incomes will be able to repay the loan. 

• The essence of employment: Applicants can be given varying interest rates by personal loan lenders depending on whether they are self-employed or salaried.  

• Age: The age of the loan seeker may also affect the lender's offered interest rate. Lenders may charge higher interest rates for individuals aged above 50 or approaching retirement. 

• Employer Details: You are more likely to crack a decent deal on your loan rate of interest if you work for a trustworthy company. This occurs because providers of loans assume that such borrowers have a steady job and constant income and will thus be able to repay the EMIs on time.  

• Lender relationship: Whether you have a pension or a savings account with the bank and share a strong history of credit repayment, the bank is most likely to give you a low-interest rate personal loan.

 Conclusion:

A personal loan balance transfer is one of the best ways to get a personal loan at a low-interest rate. However, it is always advisable to check and thoroughly read the discretion of the lenders either before applying for a personal loan balance transfer or a personal loan.