Ravi was short on funds, so he decided to opt for a personal loan. However, after a couple of months, he realised that the monthly instalments were taking a toll on his budget. So, Ravi switched to a new lender that offered a lower interest rate and repaid the outstanding amount with smaller EMIs.
This is basically called a loan balance transfer or loan refinancing. It allows you to shift debts from one lender to another for preferential loan terms, such as lower interest rates.
When should you apply for a balance transfer?
You can opt for a loan balance transfer, if:
- You are paying hefty EMIs: A lower interest rate will decrease the interest component of your EMI amount, thereby reducing the overall EMI value. Besides, you can use a personal loan EMI calculator to determine the new EMI value and estimate how much you can save on interest over your remaining tenure.
- You are dissatisfied with your current lender: If you’re unhappy with the services provided by your current lender, you can switch to a new one offering more desirable terms like no processing fees, zero prepayment charges, etc.
- You want a top-up on your existing loan: If you require extra cash and have a good credit history, you can avail of a top-up facility by refinancing your loan.
- You want to improve your credit score: You can transfer your loan to secure more favourable terms and repay your loan faster and timely. This, in turn, will improve your credit score.
Additional Read: How to Apply for a Personal Loan Balance Transfer?
If eligible, you will need to submit the following documents for the personal loan balance transfer process:
- A duly filled application form
- The loan statements and transfer details of the current lende0072
- Passport-size photographs
- An identity proof, such as voter ID, Aadhaar card, passport, etc.
- Copies of your PAN Card
- Your age proof, such as your driving license, Aadhar card, voter ID, passport, etc.
- Your address proof, such as your rent agreement, latest electricity bill, etc.
Additional documents for self-employed people:
- GST number or TAN card.
- The balance sheet for the past 3 years, along with profit and loss statements
- Bank statements for the last 6 months of the business entity and the individual
Additional documents for salaried persons:
- Bank statements of the last 6 months
- Salary slips of the past 3 months
How to apply?
- Compare lenders to find the personal loan balance transfer lowest interest rates.
- Check your eligibility.
- Estimate the total cost of loan refinancing by including the processing fee, foreclosure charges, and other fees.
- After finalising the new lender, you must file for a foreclosure letter and obtain a No-Objection-Certificate (NOC) from your current lender.
- Apply for a transfer to your new lender and submit the mandatory documents.
Over to you
Do you think that your loan terms are unsatisfactory? Then switch to Tata Capital! We offer loans at competitive interest rates and provide flexible repayment options without collateral. Need more flexibility? Don’t worry, our overdraft facility has got you covered.
Learn more about our personal loan eligibility terms here.