4 Mins Feb 7, 2022
Vibhuti Shukla bought a new car in January 2020. While it was beyond his budget, he was hopeful that he would be able to afford it with his pay hikes. But following the pandemic, his salary was cut by 25%. Other expenses meant that his ability to meet his EMI obligations was adversely affected. His personal finance advisor suggested that Vibhuti could look at transferring his car loan to a new lender, offering a longer tenure and lower interest rate, ideally both.
Here is what Vibhuti will have to do to transfer his car loan to a new lender:
Get clarity on his present loan: Vibhuti should speak to his current lender and figure out all the details about his present loan. This includes the interest rate, outstanding principal, amortization schedule and pre-payment charges. It will give a fix as to where he stands and will help him shop around for a better deal.
Look for a better deal: Vibhuti should check the terms and conditions offered by multiple lenders. Ideally, he should not look only at financiers offering a lower interest rate than his current interest rate but also look at other terms like foreclosure fees. Once he has shortlisted his list of lenders, he should check if they offer car loan balance transfer product features.
[Also Read: How a car top-up loan can help you with emergency expenses]
He should factor in pay pre-payment charges due to his present lender and processing costs charged by the new lender, before deciding on a balance transfer.
Eligibility: To be eligible for a car loan transfer, a person must be at least 21 years of age, with a monthly income of at least Rs. 20,000. Since Vibhuti meets all these criteria, he shouldn’t have a problem getting his loan transferred.
Process: Vibhuti will have to submit copies of his KYC documents, income proof, and bank statements to the new lender for the last three months while applying for his car loan balance transfer. He will also have to pay the processing charge for this new loan.
Simultaneously, he will also have to write to his existing financier to notify them of his intention to foreclose the loan and get a No Objection Certificate (NOC).
Once the new lender processes and approves his application and has the NOC, Vibhuti can execute the new loan agreement and get it disbursed to his old bank. There will be a change required in the hypothecation on his car registration papers, but agents appointed by the new bank generally handle this.
Axis Bank offers Car Loans and car loan transfers at highly competitive rates and other features. It also has many exciting offers, which you can avail of right from your home. Just check on your Axis Bank mobile app or click here.
Disclaimer: The Source, a content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.