Car loan balance transfer
A car loan balance transfer refers to the process of transferring the outstanding balance of your existing car loan to a new lender. The method to transfer a car loan is quite hassle-free and it may vary from one financial institution to another. Before you go for a car loan balance transfer, make sure you are aware of the right approach. Here, for your easy understanding, we have discussed its process in detail.
When should you go for a balance transfer?
- If your new lender is willing to offer a better deal on your car loan i.e. low-interest rate and better flexibility.
- If your income and overall financial condition has improved
- If your credit score has improved recently and now you can avail a better deal on your existing loan
- If you are looking for a top-up on your car loan at lower interest rates
Procedure to transfer your car loan
If you are not satisfied with your current car loan terms and if you feel you will struggle to continue repaying your current EMIs, you can start considering a car loan transfer. You will need to follow these steps to transfer your auto loan to another bank.
Find a new lender
In the first step, you need to do your research and shop around to find the lender that is offering better car loan deals. For this, you need to compare loan offers from multiple lenders and select the one that best suits your present requirements. After comparing, you also need to find out the interest rates, fees, and any other important factors that will impact your decision. If you find one that meets your requirements, the next step you will have to take is to talk with your present lender.
Get in touch with your current lender
In the second step, you need to talk to your current bank and find out the exact details of your current car loan. Ask them about the interest rate at which is your existing loan is being serviced. After that, you need to find out about the outstanding principal amount, the remaining tenure, the fees, and charges you are currently paying. Remember, do not forget to ask your lender the fee that you will have to pay while transferring your loan. If you have a net banking account with your lender, you can check this vital information online itself.
Benefits of car loan balance transfer
You can enjoy the following benefits when you transfer your current car loan to a new lender-
- More affordable interest rates
- Better loan features
- Lower charges associated with your loan
- Better repayment terms
- An overall reduction in your car loan cost
Eligibility criteria for car loan balance transfer
- The eligibility criteria for transferring your car loan balance may vary from one bank to another. The most common criteria include:
- The minimum and maximum age required is 21 years old and 60 years or lesser.
- You should have a minimum repayment record for at least 9 months for the car that you own. Remember, this can vary from one bank to another.
Documents required for car loan balance transfer
For salaried professionals
- latest 3 months’ salary slips
- latest 3 months’ bank statements showing salary is being credited
- Identity proof: Voter ID card / Aadhaar card/ passport/ driving license
- Address proof: Telephone bills/electricity bills/ water bills (not more than 3 months old)
- PAN Card
- Duly filled car loan balance transfer application form along with your passport-sized photographs
For self-employed individuals
- PAN Card
- Balance Sheet and Profit & Loss Statements, with relevant annexures and schedules, from the last 3 years
- Current account statements of the business account
- Savings account statements of the individual
Factors to consider before opting for a balance transfer
Below given are the factors that you need to consider before availing a car loan balance transfer-
The difference in the interest rate of the existing lender as well as of new lender
- Calculate the foreclosure charges, transfer cost and overall profit
- Additional charges levied by your new lender
- Your credit scores
