Interest rates eating away into your savings? Maybe it’s time to transfer your personal loan


The decision to avail a personal loan is not an easy one. Before you avail a personal loan you get to know your interest and your EMIs through the personal loan calculator. Once you understand the same, availing a loan becomes a calculated decision that you would make. Since, at that time, it is the best option you can take, you take the leap of faith.

Rahul and Neha, too, took the leap of faith when they had to avail for a personal loan for the wedding expenses. While they knew that they would have to consider the additional cash outflow in their financial budget, they thought they could manage the same. However, a couple of months down the line, they realized that because the interest rates along with the EMI on their personal loan was eating into their already existing savings and they had to find a way out of this dilemma.

On discussing the same with their financial advisor, they were informed that they could get to transfer the personal loan to a different lender. Transferring personal loan would not just reduce the EMIs but also add to their savings and provides more disposal income. Their financial advisor explained that there are many lenders who allow transfer of personal loans and it is a simple process.

As skeptical as they seemed they decided to explore personal loan transfer with Tata Capital.

How to transfer personal loan?

The process of transfer for a personal loan is simple:

  • Start your research by looking for the best option for different personal loan transfer schemes available in the market.
  • Once you know which lender will give you the best option, share details of the existing personal loan, the principal amount left, tenure completed, EMIs paid and rate of interest, etc.
  • Financial institutions will sometimes look at your repayment track record for the past year, before initiating any personal loan transfer.
  • However, there might have a lock-in period of one year with your existing lender. It is best to get the same checked before the existing loan can be transferred to the other financial institution.
  • The financial institution will require a fresh loan application form with the supporting documents of salary slips, bank statements, PAN card and identity and address proofs, etc., to process the loan transfer request.
  • Once the personal loan transfer application is processed and the case is creditworthy, the loan is sanctioned and the amount is disbursed.

Other factors to be considered while transferring a personal loan are:

  • Processing fee: You may have already paid a processing fee to the original lender. However, while transferring to a personal loan to the new financial institution you will have to pay the processing fee once again.
  • Collateral security: There are chances that you may be asked for collateral security. The new lender might ask for a collateral security against the loan amount. Though a large part of the loan has already been repaid, it is irrelevant to mortgage the high-value asset as security.
  • Cash outflow: Before you transfer your personal loan, you have to consider the fact that though your EMIs have reduced your repayment loan tenure has increased. You will need to be diligent enough to calculate and judge whether the total cash outflow over the years is worth transferring the personal loan.
  • Other terms and conditions: Make sure you look into the various terms and conditions before transferring your personal loan. While most of the clauses are cleared beforehand, you should always get your queries and doubts cleared before the transfer of the personal loan.

Before jumping on to the decision of transferring the personal loan, you should consider both the benefits and loopholes of the new lender against the existing financial institution. A strong credit score is required for personal loan transfer. If you have not been regular with EMIs, the new lender can reject the personal loan transfer request.

For Rahul and Neha this decision proved to be wise. They could easily transfer their existing loan to Tata Capital at competitive interest rates. This decision not only helped them equate their savings more carefully but also plan and build a secure financial future.