• How to Transfer a Car Loan

    Car loan transfer refers to the process of transferring the balance of your existing car loan to a new lender. The method to transfer a car loan is quite simple and can vary from lender to lender.

    When does car loan transfer make sense?

    • If you find a better auto loan deal with better interest rates and better features, after you have taken one already.
    • If your income and overall financial condition have improved well.
    • If your credit score has increased during your present loan tenure.

    Method to transfer your car loan

    If you are not too happy 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:

    Look for a new lender to transfer your loan

    • First, start looking around for better car loan deals. You can do this by doing online loan comparisons on third-party financial web portals.
    • You may also call various banks to see what they have to offer.
    • You will also need to ask them if have car loan balance transfer feature.
    • If they do, find out the interest rate, fees, and terms related to the transfer.
    • If you find one that meets your requirements, you will next have to talk to your current lender.

    Get in touch with your present lender

    • Now, you need to find out the exact details of your current car loan.
    • Ask about the interest rate at which is your existing loan is being serviced.
    • Then find out about the outstanding principal amount, the remaining tenure, the fees and charges you are currently paying, etc.
    • Do remember to ask about the fees you will have to pay for processing the balance transfer.
    • If you have a netbanking account with your lender, you can check this vital information online itself.
    • You will also have to ask your current lender for the DD or cheque details for completing the balance transfer.

    Benefits of car loan transfer

    When you transfer your current auto loan to a new financier, you can enjoy the following benefits:

    • More affordable interest rates
    • Better loan features
    • Lower fees and charges associated with your loan
    • Better repayment terms
    • Overall reduction in your car loan cost

    Case study to understand how you can transfer a car loan

    Let us assume a simple scenario to get an idea of how car loan balance transfer works. Imagine you have been paying EMIs for a car loan from Bank X. Now imagine you find a better loan with an attractive interest rate offered by Bank Y.

    You need not be disappointed that you already have a loan from Bank X. If you choose the car loan transfer facility, you will be able to transfer your outstanding loan amount to Bank Y and you will no more be indebted to Bank X.

    Bank Y will clear your old loan (availed from Bank X) and you can pay your EMIs to Bank Y by enjoying better loan terms and rates.

    Documents required for car loan balance transfer

    A summary from your current lender with details about your existing loan including outstanding principal, interest, and the remaining tenure

    • Income proof: Salary slips for the last 3 months or income tax returns
    • Bank statements
    • Address proof
    • Proof of identity
    • KYC documents
    • Passport size photos

    Eligibility criteria for car loan balance transfer

    The eligibility criteria for transferring your auto loan balance may vary from lender to lender. The most common criteria include:

    • You should be at least 21 years old at the time of applying for the loan.
    • You should be 60 years or lesser at the end of your loan tenure.
    • You should have a minimum repayment record for at least 9 months for the car that you own. (This can differ from lender to lender)

    If you think that transferring your auto loan balance to a new lender will reduce your overall loan expenses, you should definitely go for it. You can avail the balance transfer facility for almost all private cars, whether it is a sedan or a hatchback.

    However, if you think that you will end up paying more after going for a balance transfer, then you should not go ahead. Instead, you can continue looking for better loan deals to choose a good financier

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