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November 30, 2016
The Balance Transfer programme has been introduced by Banks in a bid to increase their Personal Loan Portfolio, by taking over the existing Loans running with competition;
Better rates & terms are offered to lure customers who are successfully paying back their Loans. With this man oeuvre the Banks are assured of profitable business, whereas the customer is able to get better rate of Interest.
Before applying for a Balance Transfer the following Terms & Conditions of the Existing Personal Loan need to be checked-Your existing personal loan is bound by terms & conditions which can affect your transfer decision.
MAJOR TERMS & CONDITIONS THAT AFFECT THE CLOSURE OF YOUR EXISTING PERSONAL LOAN INCLUDE-
When applying for a Balance Transfer of a Personal Loan, be aware that there can be a charge applicable by the Parent Bank for closure of the existing personal loan.
Penalty charges for closure of your Personal Loan before the tenure expires vary according to the stipulated policy of the Lending Banks & can range from nil up to 6%.
This charge will be levied on the outstanding Principal Balance of the personal loan.
It is prudent to be aware of the financial implications of paying a closure charge while applying for a fresh personal loan or taking a transfer.
It is an ideal situation if no charges have to be paid to the parent Bank, but sometimes affecting a Balance Transfer even after incurring charges for pre closure may be profitable.
There is no uniform policy for Closing or paying back your personal loan before the expiry of the total term for which the loan is taken. Each Bank/NBFC has put forth its own clause. Given below is a list of Pre closure charges of various Banks & NBFC’S.
| INSTITUTION NAME | PRECLOSURE CHARGES APPLICABLE |
| HDFC BANK | 4% |
| ICICI BANK | 5% |
| AXIS BANK | NIL |
| KOTAK MAHINDRA BANK | 6% |
| CITI BANK | 2% |
| STANDARD CHARTERED BANK | 4% |
| FULLERTON INDIA | 6% |
| BAJAJ FINSERV | NIL |
| INDUS IND BANK | 4% |
A Lock in period is the mandatory time stipulated by the Lending Institution for paying of interest on the Loan Amount.
The Institute lending the Loan amount is inclined to recover a minimum interest amount before allowing the customer to return the balance of the loan amount & close the loan.
Attention should be paid to the Lock in period clause while signing the agreement for your Personal Loan.
The lock in period clause is not constant across the industry. Some institutions allow the customer to pay back the loan amount, after paying the first EMI, while other Banks have a Lock in period for 12 months.
| INSTITUTION NAME | LOCK IN PERIOD |
| HDFC BANK | 12 MONTHS |
| ICICI BANK | 6 MONTHS |
| AXIS BANK | NIL |
| KOTAK MAHINDRA BANK | 12 MONTHS |
| CITI BANK | 6 MONTHS |
| STANDARD CHARTERED BANK | 6 MONTHS |
| FULLERTON INDIA | 6 M0NTHS |
| BAJAJ FINSERV | NIL |
| INDUS IND BANK | 12 MONTHS |
A minimum number of EMI’s of the existing personal loan need to be paid before the corresponding Bank will accept your request for a Balance Transfer.
Given Below are the details of the various Banks pertaining to number of EMI’s that need to be paid before acceptance of your application for Balance Transfer.
| FINANCIAL INSTITUTE | NOS OF INSTALLMENTS |
| HDFC BANK | 1 EMI |
| ICICI BANK | 12 EMI’S |
| KOTAK MAHINDRA | 6 EMI’S |
| CITI BANK | 6 EMI’S |
| AXIS BANK | 6 EMI’S |
| BAJAJ FINSERV | 6 EMI’S |
Balance Transfer of your Personal Loan will be successfully done if the emi’s of all previous payments have been cleared on time.
Any bounces or delayed payments will always reflect on the payment record, one or two late payments over a year can be overlooked but a string of late payments will be considered as a will full default. It might be prudent to stay with the parent Bank if there have been delays in repayment. The Bank taking over your personal loan will do so only after checking your previous track record & CIBIL Score.
Apply for the Balance Transfer of your personal only after paying heed to the above clauses; always remember that every time an application is submitted to the Bank it will affect your CIBIL Score. We at Yourloanadvisors.com are always ready to guide our customers for the Best Balance Transfer deals available for your existing Personal Loan.
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