In India of today, getting a personal loan has become much easier thanks to the many banks and NBFCs which specialize in this service nowadays. With the right set of documents and proper income proof, you can get a personal loan within the next 24 to 48 hours. Along with this, one of the most attractive and interesting aspects of personal loans is the fact that they can be used for a variety of purposes. For example, you can use a personal loan as a two-wheeler loan, or you can use a personal loan in a cash crunch situation, and even better, you can use your personal loan to pay back your credit card dues or another loan.
The flexibility offered by a personal loan is immense, and that is the reason as to why this is one of the most favored financial instruments among the youth of today. Along with this, personal loans come with a whole suite of features that are primarily missing from other standard loans in the market, such as flexible repayment plans, flexibility to choose repayment amount, lowest rates of interest, and many more.
If you are planning to use your personal loan for the balance transfer, there are a couple of things you need to consider, and in this article, we will talk about exactly that. Let's get started.
Since we are speaking about balance transfer from personal loans, let us first understand the meaning of a personal loan. In the simplest of terms, a personal loan can be understood as being a financial instrument through which you can borrow a certain amount, usually in the range of ₹10,000 to ₹500,000.
A personal loan comes with a flexible repayment schedule and has one of the lowest rates of interest in the market, due to which it is one of the best-suited loan processes when you are in a cash crunch situation. Along with this, another feature of personal loans that makes it interesting is the fact that the application process is completely online, and rarely will you need to visit the lender's office or meet an agent to fill out your application and consecutively get it approved.
Now that you have a clear understanding of what a personal loan is, let us better understand what essentially balance transfer means.
A personal loan balance transfer can be essentially understood as a process in which an existing borrower transfers the outstanding balance of a personal loan to another loan in order to negotiate for better repayment terms, longer tenure, and reducing financial stress. In simple words, a personal loan balance transfer is a process in which you use an existing loan to pay back another loan or credit due, to reduce your financial stress.
● Lower Rate of Interest
One of the first and most important features of a personal loan is the fact that when you use it for the balance transfer, the rate of interest levied on you as a borrower is drastically reduced. The reduction of interest subsequently boils down to better EMI options, and thus you will ultimately have a lower financial burden.
● Longer Repayment
The second feature of a personal loan balance transfer is the fact that it allows you to pay back your dues through a longer tenure. Since you are essentially using a personal loan to pay back a pre-existing loan, you will have the advantage of more time to pay back your dues, thus reducing your financial burden.
● Availability of a Top-Up
A lot of first-time borrowers might not be aware of this, but when you use a personal loan for the balance transfer, most lenders will extend you a top-up facility. A top-up in the context of a personal loan means that you will be able to get a higher credit in case you need it and thus be able to borrow more money in a situation of need. Along with this, when the lender is extending your top-up, you will need to submit minimal documentation since your loan will already be pre-approved.
● Better Services
Another underrated feature of the personal loan balance transfer process is the availability of better services. In case you are dissatisfied with the services of your current lender, by transferring the loan amount, you can choose a lender with better services and thus avail the facilities you want.
While the personal loan balance transfer process is simple and easy, there are a couple of eligibility criteria you need to meet, and they are as stated below.
1. One of the first and most important criteria is that the current outstanding loan amount that you owe needs to be either ₹50,000 or more, and only then can you initiate the balance transfer process.
2. Once you initiate the balance transfer process, your past repayment history will be checked and scrutinized to ensure that you have a good payback discipline. At least the last 12 installments of your EMI repayment will be taken into consideration at a minimum.
3. Along with this, you also need to ensure that you at least have one or more active credit cards or loans to ensure that your balance transfer process gets approved.
4. A good credit score is great to have when you are applying for a personal loan balance transfer. Generally, you need to either have a credit score of 700 or more.
Along with meeting the eligibility requirements, there are a few documents that you will need to present. You will need:
1. A copy of duly signed and attested personal loan balance transfer form, along with 2 recent passport size photographs.
2. Aadhar, PAN, or Voter ID card as proof of current residence and address.
3. Proof of age, the same documents mentioned above can be used.
4. Pan Card copy
5. If you are a salaried employee, you will additionally require your last 6 months' bank statements, salary slip for the last 3 months, and a statement of personal loan from your current lender.
6. If you are a self-employed professional, you will additionally require your GST or TAN number, 6-month bank statements (both individual and business), a 3-year balance sheet of your business along with a profit and loss statement, and a statement of personal loan from your current lender.
Availing the personal loan balance transfer process will not only reduce your financial burden but also give you access to better services and facilities such as longer repayment tenure, better rates of interest, and flexibility to choose your monthly EMI amount.
So if you are thinking about applying for a personal loan balance transfer, go ahead and apply for one today.