- How does the Balance Transfer facility of different loans and credit cards help individuals?
- How much money can you save using the Balance Transfer? Let’s check out here!
Are you struggling to repay your loan and credit card balance because of higher interest rates? Do you want to transfer your outstanding balance from your current lender to another lender at lower interest rates? Well, a Balance Transfer Facility could be the perfect choice for you. A Balance Transfer facility enables customers to transfer their outstanding loan amount or credit card balance at lower interest rates. With this, they can save a substantial amount of money on EMI amount and interest outgo. Several lenders provide Balance Transfer on different loans and credit cards.
When we talk about different loans, some of the most popular options on which customers generally take Balance Transfer are Home Loan, Personal Loan, Car Loan. So how does Balance Transfer help? Let’s understand it in simple terms. Interest rates directly affect your repayment amount. So, if a customer has a loan at higher interest rates, he or she can transfer their outstanding balance to another lender at lower interest rates. The reduced interest rates will let individuals save a huge amount of money. Balance Transfer facility could be an efficient option to ensure maximum savings on your Home Loan, Personal Loan, or Car Loan.
Here, we will cover several things like how Balance Transfer functions on different loans & credit cards, what are the top lenders that provide Balance Transfer at an affordable interest rate and how much money an individual can save with a Balance Transfer. So, without any further delay, let’s get to it. First, we will talk about Balance Transfer on a Home Loan.
Home Loan Balance Transfer
Home Loan is one of the most popular options among customers who opt for the loan amount to purchase their houses. Several banks and HFCs provide home loans to customers. Home Loans are generally considered to be high-ticket purchases and customers always look for methods that can help them save the maximum amount. One of the efficient methods to ensure this is by opting for a Balance Transfer Facility. With this, a customer can transfer his or her outstanding principal amount to some other lender providing lower interest rates than the current one. And as we said, the Balance Transfer facility helps reduce both EMI amount and interest outgo.
Lenders charge a certain processing fee from customers when they opt for this facility. This fee is either a flat amount or a certain percentage of the principal outstanding amount. One of the important things that a customer needs to remember is the home loan balance transfer facility should be taken in the initial years of the loan tenure. The reason being the interest outgo tends to be higher during the initial years.
Other than this, you should also make sure that you have been repaying all your EMIs on time as lenders always check the repayment behavior before approving the Balance Transfer request. People with higher credit scores (700 or above) do have higher chances compared to people with low scores. Also, the lender will check your property value and location to make the final decision.
How much Money Can You Save with a Balance Transfer Facility?
Now, you would like to know how much money you can save with a Balance Transfer Facility on your home loan. We are giving you an example so that you can understand it better.
Let’s say an individual has opted for a 16-year Home Loan of INR 32 lakh at an interest rate of 8.60% per annum. Now, he wants to opt for the Balance Transfer facility after paying the EMIs for 5 years to get lower interest rates from another lender. For the loan amount, the EMI amount must be INR 30,735. The new home loan interest rate is 7.40% per annum which is lower than the current one. So, let’s see how much money he can save with the said transaction. Check the below table.
|Existing Loan Amount||INR 32 lakh|
|Interest Rate||8.60% per annum|
|EMI at the current interest rate of 8.60% per annum||INR 30,735|
|Estimated Interest Outgo at 8.60% per annum||INR 27,01,064|
|Interest Paid till now ( 5 Years )||INR 12,61,807|
|Outstanding Balance at the end of 5 years||INR 26,17,725|
|EMI at the new interest rate of 7.40% per annum||INR 29,044|
|Interest Outgo at the new interest rate of 7.40% per annum||INR 12,16,017|
|Interest Paid till now + Interest for the remaining 10 years||INR 25,22,824|
|Estimated EMI Saving||INR 1,691 (30,735 - 29,044)|
|Estimated Interest Savings||INR 1,78,240 (27,01,064 - 25,22,824)|
From the above table, you can clearly see that by opting for the Balance Transfer Facility, you can save INR 1,691 per month on the EMI amount and INR 1,78,240 when it is about the interest outgo. Balance Transfer facility could prove to be the perfect choice for an individual who wants to save the maximum amount on the Home Loan.
Top Lenders Providing Home Loan Balance Transfer Facility in India
While applying for the Balance Transfer facility, it is important to choose a lender that provides the lowest interest rates. To make it easier, we are showing some of the top lenders who provide a Balance Transfer facility in India. Please have a look.
|Lenders||Home Loan Balance Transfer Rates (In per annum)|
|State Bank of India (SBI)||8.05%-8.55%|
|Axis Bank||7.60% - 8.05%|
|ICICI Bank||8.10% - 8.95%|
|HDFC Limited||8.10% - 9.10%|
|LIC Housing Finance (LIC HFL)||8.00% - 9.25%|
|Tata Capital||7.75% onwards|
|Bank of India||6.90% - 8.75%|
|PNB Housing Finance (PNBHFL)||8.00% - 10.70%|
Personal Loan Balance Transfer
Same as Home Loan, lenders also provide Balance Transfer Facility on personal loans. A personal loan is considered to be the top choice among customers when they want to meet their urgent need for funds. Personal loans are unsecured loans and this is why lenders charge higher interest rates. Do you know that you can transfer your outstanding personal loan amount to other lenders at lower interest rates with a Balance Transfer? But what will you achieve by doing this? Well, you can save your EMI amount and interest outgo because of the lower interest rates.
There are a few things you should know before choosing a suitable lender for the Balance Transfer facility. We are showing them below. Do check.
- For the Balance Transfer, lenders charge a certain processing fee that primarily depends on the principal outstanding amount or it can be a flat amount. Also, it tends to change from one lender to another.
- Your credit score must be good (700 or above) and you must be repaying your EMIs on time. Lenders check your repayment behavior to see if you have missed any EMIs or not. In case you have, the lender might delay the approval for a balance transfer.
How Much Can You Save with a Personal Loan Balance Transfer Facility?
To have an estimate about the savings you can make with a personal loan with the Balance Transfer, we are providing you an example. Let’s say an individual has a 5-year loan of INR 12 lakh at an personal loan interest rate of 16% per annum. Well, according to this loan amount, he must be paying an EMI of INR 29,182. Now, after paying the EMIs for 24 months without any fail, he wants to opt for the Balance Transfer at a lower interest rate of 13.50% per annum.
So, to know how much an individual can save, let’s look at the below table where we are showing all the required calculations.
|Existing Loan Amount||INR 12 lakh|
|Interest Rate||16% per annum|
|Tenure||5 years (60 months)|
|EMI at the current interest rate of 16% per annum||INR 29,182|
|Estimated Interest Outgo at 16% per annum||INR 5,50,900|
|Interest Paid till now ( 2 Years )||INR 3,30,398|
|Outstanding Balance at the end of 2 years||INR 8,30,037|
|EMI at the new interest rate of 13.50% per annum||INR 28,168|
|Interest Outgo at the new interest rate of 13.50% per annum||INR 1,83,995|
|Interest Paid till now + Interest for the remaining 3 years||INR 5,14,393|
|Estimated EMI Saving||INR 1,014 (29,182 - 28,1680|
|Estimated Interest Savings||INR 36,507 (5,50,900 - 5,14,393)|
It is quite clear from the above table that when you opt for a Balance Transfer at an interest rate of 13.50% per annum, you can save INR 1,104 per month on the EMI amount and INR 36,507 on the Interest Outgo. It’s important to have an estimate of the money you can save with a Balance Transfer facility. All these calculations can be done with the personal loan EMI Calculator.
Top Lenders Providing Personal Loan Balance Transfer Facility in India
To make the process of choosing the best personal loan balance transfer facility for you, we are showing some of the top lenders that provide the same. Please have a look.
|Lenders||Personal Loan Balance Transfer Rates (in per annum)|
|State Bank of India (SBI)||9.60% - 13.60%|
|ICICI Bank||10.50% - 18.00%|
|Kotak Mahindra Bank||11.65%-15.05%|
|IndusInd Bank||10.49% - 31.50%|
|Standard Chartered Bank||10.99%-11.99%|
|Tata Capital||10.75% - 18.00%|
|Bank of Baroda||10.00% - 15.60%|
|Punjab National Bank (PNB)||8.95% - 14.00%|
|Central Bank of India||9.85% - 10.05%|
Balance Transfer on Car Loan
Several banks and financial institutions provide car loans to customers so that they can buy their dream car at an affordable interest rate. The best thing about a car loan is customers can buy both new and pre-used cars without any trouble. A lot of customers opt for a Balance Transfer facility on their car loans to save themselves from higher interest rates. Usually, Car Loan Interest Rates range from 7% to 14% per annum on average. So, when you transfer your outstanding principal amount to a lower interest rate, the EMI amount and interest outgo will automatically become lower. All car loan lenders provide the Balance Transfer Facility.
And not only this, customers can even get a Top-up loan over and above the existing loan amount to meet their capital requirements. However, lenders check the credit score of the customer to get assurance about his or her repayment behavior. Customers with high credit scores can get the Balance Transfer at lower interest rates. You also need to remember that lenders also charge a certain processing fee for this facility.
How Much Can You Save with a Car Loan Balance Transfer Facility?
Customers can save a huge amount of money on choosing the Balance Transfer Facility on their car loan. You must be thinking how? Well, for this, we are providing you an example with which you will understand better.
Let’s say an individual who has a 7-year Car Loan of INR 8 lakh at an interest rate of 14.99% per annum. He has been paying an EMI amount of INR 15,433 for the last 24 months without any fail. Now, he wants to opt for a Balance Transfer Facility to enjoy the lower interest rate of 13.20% per annum. Let’s see how much money he can save in the table below where we have provided all the related calculations.
|Existing Loan Amount||INR 8 lakh|
|Interest Rate||14.99% per annum|
|Tenure||7 years (84 months)|
|EMI at the current interest rate of 14.99% per annum||INR 15,433|
|Estimated Interest Outgo at 14.99% per annum||INR 4,96,365|
|Interest Paid till now ( 2 Years )||INR 2,19,249|
|Outstanding Balance at the end of 2 years||INR 6,48,859|
|EMI at the new interest rate of 13.20% per annum||INR 14,830|
|Interest Outgo at the new interest rate of 13.20% per annum||INR 2,40,944|
|Interest Paid till now + Interest for the remaining 5 years||INR 4,60,193|
|Estimated EMI Saving||INR 603 per month (15,433 - 14,830)|
|Estimated Interest Savings||INR 36,171 (4,96,365 - 4,60,193)|
On transferring the principal outstanding amount of INR 6,48,859 at a lower interest rate of 13.20% per annum, the individual can save around INR 600 per month as the EMI amount will be lower than before. Similarly, he can save INR 36,171 when it comes to the interest outgo. This is an example to show how much money you can save when you opt for a Car Loan Balance Transfer Facility. You can do it yourself with the help of the Car Loan EMI Calculator.
Top Lenders Providing Car Loan Balance Transfer Facility in India
There are several lenders who provide Car Loan Balance Transfer and it can be confusing for customers at times to choose the suitable option. That’s why we are showing Balance Transfer Interest Rates of some of the top lenders in India. Please have a look.
|Car Loan Lender||Interest Rate (in per annum)|
|SBI||7.20% - 7.90%|
|Bank of Baroda||7% onwards|
|Punjab National Bank||6.50% Onwards|
|ICICI Bank||7.90% Onwards|
|HDFC Bank||7.95% - 8.30%|
|Bank of India||6.85% onwards|
|IDBI Bank||7.50% Onwards|
|Jammu and Kashmir Bank||7.85% Onwards|
|Union Bank of India||7.80% - 7.90%|
|Central Bank of India||7.25% - 7.70%|
Credit Card Balance Transfer
Are you struggling to pay your huge outstanding credit card bill due to the higher interest, penalties and other charges? Are you stuck in a revolving debt trap because of the habit of minimum credit card due? Do you want to transfer your outstanding credit card bill into another lender to enjoy lower interest rates? Well, a Balance Transfer on Credit Card could be the most suitable option for you. It is because a balance transfer facility enables credit cardholders to transfer their outstanding balances from their existing card to another lender so that they can pay the outstanding balance at lower interest rates.
Let’s understand it in simple terms. Suppose an individual has a huge outstanding balance on his credit card/s. Now, the interest on this outstanding amount is also increasing the overall balance. So, the Balance Transfer facility allows you to transfer your outstanding balance to another bank at lower interest rates. Each lender charges a certain processing fee on this facility that tends to change from one lender to another.
With the Balance Transfer Facility, the transferable amount will be decided by the bank itself and it may vary from one individual to another. For example, ICICI Bank allows customers to transfer outstanding credit card balances upto INR 3 lakh.
So, how can you pay the outstanding balance after transferring it to some other lender? Well, some banks provide the option to repay the amount within a short tenure at zero interest rate, and some banks provide the option to repay via Equated Monthly Installments (EMIs) within a fixed tenure of say, 3-6 months. The EMI amount will consist of the principal and interest amount.
For example, SBI provides mainly two options on a Balance Transfer Facility. First, customers can transfer their outstanding balance to SBI and repay it within 60 days at Zero Interest. The processing fee for this will be INR 199 or 2% of the Outstanding amount. Second, customers can choose to repay the amount via EMI within a tenure of 6 months at an interest rate of 1.7% per month (20.40% per annum) at zero processing fees.
You need to remember the fact that lenders always check the overall profile of an individual before providing the Balance Transfer facility on a credit card. And it is important to choose the lender with lower interest rates so that you can repay the outstanding principal amount easily.