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September 13, 2016
Is the EMI of your Personal Loan straining your budget? Do you think your Personal loan Interest Rate is higher than the current rate? Restructuring your loan with the Balance Transfer to an alternate lender is convenient. With the Balance Transfer of the principal balance of your loan amount, you can get a lower interest rate with a suitable EMI.
A Balance Transfer enables an individual to shift the outstanding principal amount of their existing loan to a different lender. This program is designed to incentivise customers who consistently make their Personal Loan EMI payments on time. Banks offer the lowest interest rates and favourable terms to eligible customers who transfer their loan balance. Individuals with an existing Personal Loan can benefit significantly from a Balance Transfer. Here are the key reasons to consider applying for it:
Lenders offer the best terms to applicants for taking over a Personal Loan, keeping in mind that the customer is paying the EMI on time and will benefit the bank further by maintaining an assured repayment track.
The interest rate offered by leading Banks such as HDFC Bank and ICICI Bank for the Balance Transfer of a Personal Loan is 10.85%, which is the rate provided to elite customers who apply for ₹ 10 Lakhs or more. Other banks, such as Axis Bank, offer to reduce the existing Interest Rate of Personal Loans by 2% or more.
The minimal interest rate offered for a Balance Transfer is to attract sound customers who will increase the Bank’s profitability.
The monthly instalment for your Personal loan is deducted from your salary account on a fixed date. Ensuring sufficient balance in the account to honour the EMI is vital. There could be budgetary restrictions if the monthly earnings are inadequate to meet sudden expenses. Opting for the Balance Transfer of Your Personal Loan will help reduce your monthly EMI.
Your loan balance is reduced because you have already repaid part of the principal. After a balance transfer, a new loan is structured with a reduced amount, a lower interest rate, and an extendable tenure; thus, the applicant can get a lower EMI.
Listed below is the example depicting a reduced EMI after the Balance transfer.
Original Loan Amount: ₹ 500000 Lakhs.
Current Principal Outstanding After 15 EMI: 370505.
After a Transfer:
| Interest Rate | Tenure | EMI | |||
| Existing Interest rate | 13% | 48 months | 13413.75 | ||
| Post Balance transfer | 10.85% | 60 months | 8028.1 |
Managing multiple Personal Loans and their respective EMI dates can be overwhelming. However, with HDFC Bank Balance Transfer, you can consolidate all your loans under a single EMI, bringing a sense of organisation and control to your financial management.
When you use a Balance Transfer, you can calculate and consolidate the total money owed on all your loans. Even if the loans have different interest rates, a Balance Transfer allows you to apply a single, consistent, lower interest rate, making it easier to manage. This means you’ll make a single monthly payment and save money on interest.
Below is an example of 2 Personal Loans clubbing together with a Balance Transfer.
(Personal Loan-1) EMI for ₹ 500000 @ 12% for 36 months = 16607.15
(Personal Loan-2) EMI for ₹ 200000 @ 13% for 24 months. = 9508.3
(Personal Loan-1) Principal Balance after 15 months=313160.84
(Personal Loan-2) Principal Balance of Loan after 13 months= 98100.96
The principal balance of both loans for transfer= 322669.2
Reduced EMI after Balance transfer @ interest rate of 11% for a tenure of 48 months=8339.55
App loans are tempting because they offer immediate funding but attract a higher interest rate; as the tenure is restricted, the Emi is inflated. A third party finances Application Loans, and customers running an App loan can find it challenging to reach the original lender in case of any issues.
Axis Finance, a subsidiary of AXIS Bank, permits customers to transfer the existing dues of an App loan as a Personal Loan Balance Transfer. The App loan details can be included with the existing Personal Loan Application for a Balance Transfer To Axis Finance. The loan amount can be repaid conveniently with a reasonable interest rate and a suitable tenure.
If you cannot pay your current credit card bill and transfer the outstanding amount to the next cycle, the excessive interest charged on the balance can lead to mounting credit card overdue and a debt cycle. Unpaid credit card bills attract an interest rate of 36% per annum, which is double the interest you would pay for a Personal Loan. Paying the minimum due, 5% of the bill, on the due date is mandatory. Otherwise, further penalties are imposed. Once the dues mount up due to the interest levied, cardholders find themselves in a tight spot, leading to delayed payments and penalties. The credit score is also affected thus, Apply for a Balance Transfer of Your Credit Card dues before the HDFC Bank rejects your request because the eligibility criteria are unmet.
Take timely action by transferring your Personal Loan dues via a Balance Transfer to HDFC Bank. HDFC Bank will pay your outstanding dues to the Credit Card lender, which can be paid back with a suitable EMI.
Interest on a mortgage is applied as a floating rate, which is governed by fluctuations in the prime lending rate of the RBI (Reserve Bank of India). If your Lender offers you higher interest than the current rate applicable and does not promptly provide you with the benefits of a lower PLR, apply for a Balance transfer of your Home Loan to a more transparent bank. With a balance transfer of your home loan, you can get a lower EMI and choose a suitable tenure for repayment.
Surplus funds as a Personal Loan Top-up are available with the Balance Transfer of your loan. The funds approved as a Top-up are transferred to the applicant’s account with the principal balance of the existing loan. Thus, the applicant can receive extra funds at the same lowered rate affected by a balance transfer.
Transferring your Personal Loan, Credit Card, and app loan dues can potentially increase your Loan Eligibility, bringing hope and optimism to your aspirations for home ownership. Review your Personal Loan Eligibility before applying with our Personal Loan EMI Calculator.
Customers can review the terms for ICICI Bank Balance Transfer, Axis Personal Loan Transfer, and HDFC Personal Loan Balance Transfer programmes to determine the best Lender for their Personal Loan Balance Transfer.
This is an ideal scenario for an applicant who can consolidate the existing loans and obtain funds at a lower interest rate. If you are unsatisfied with your existing Personal Loan terms, opt for a transfer for benefits.
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