Loans
6 things you should look at before transferring your loan

Banks and finance companies are trying to gain business by offering lower interest rates. But you, as a borrower, need to look at other aspects as well, before moving your loan from one bank to another. Here are the six things you must consider


“You can transfer your high-cost home loan from any other bank to our bank and not only save on interest but also avail a higher loan amount” is the pitch from one of well-known banks. Most of us would definitely be tempted to go in for such a transfer. And why shouldn’t we? For the double benefit that is being provided, why would anybody not avail such an opportunity and that too when interest rates are so high? But stop and think. Is it all so simple? Should I actually go a step ahead to find the details? The answer is “yes, you should” and here is WHY and WHAT you should look at.
 

Technically called “takeover of loan”, transferring a loan means approaching a bank and asking it to issue a loan amount that is the outstanding amount with the current bank, repaying to the current bank and continuing the loan with the new bank. You will benefit from the lower interest rates or lower EMIs. And the bank? It gains new business. But, is the interest rate or a lesser EMI the only consideration? Not really. Here are six important factors that help you take the final decisions:
 

  • Calculate the total outflow
     

Although the new bank tries to attract you by reducing your monthly EMI and giving you a longer span to repay (increasing your tenure), you should be clear that such facilities increase the total amount you pay to the bank because the interest keeps on adding to the outstanding loan amount. If you are paying higher EMIs with your current bank, compare the total outgo for both banks and then take a decision. If you are not hard-pressed for cash, you should prefer staying with your bank, pay a larger EMI and finish off your loan as soon as possible to save all the money you would overpay, by opting for a longer tenure.
 

  • Study the processing fees and other allied charges
     

Take into consideration the processing fee, stamp duty, legal charges, valuation fee, technical charges and other allied charges that your new bank would charge and compare it with the benefit in terms of reduced interest rates. Is there a net benefit or a net loss?

 

For some banks, processing fee is a percentage of the total loan amount, while for others, it depends upon whether you are salaried or run a business. Still others have a fixed amount, uniform for all. If the bank calculates it on the basis of the outstanding amount, calculate it in rupee terms to find the cost. Also, your existing bank may jack up the costs of closure of accounts if it finds out that yours is a case of takeover. One of the complainants in an online complaint forum talks about how the bank officials refused his request to charge the interest rate on floating basis and insisted for recovery on a fixed rate of interest if the customer opted for takeover. They wanted the customer to pay at fixed interest rates, much higher than the floating rates applicable.
 

  • Collateral to outstanding ratio
     

If you have already repaid a huge chunk of your loan, do not offer the complete original collateral to your new bank. Why would you want to give a security which is double the amount of your loan outstanding? You would use it to take a separate loan instead, if the need arises. Offer your new bank a lesser amount of collateral. And if the bank still insists on the same, negotiate for lessening the interest rate further.
 

  • Charges and benefits of allied account requirements
     

When you take a loan, banks generally require you to open a savings account and route your money through that account. In case it does so, find out the charges applied and the facilities provided to you. For example, a Canara Bank education loan account does not accept EMIs through net banking. HDFC net banking allows you to make NEFT only 24-hours after you have submitted the request, the first time.

 

You should consider such provisions and your requirements before taking the final decision. Also, if your current bank is the one where you do all your banking, you become a premium customer for them; know a lot of their staff, are well-versed with their processes and may also be given services faster than others in queue. These softer aspects go a long way for ease of use and comfort banking, and should be thought about before foregoing them.
 

  • Terms and conditions governing loans
     

Before signing on the dotted line, you MUST read all terms and conditions of both banks. Some banks include buying insurance from specific company or depositing a certain amount in fixed deposits or opening a number of saving accounts for self as well as family, etc.  Read the “terms and conditions” part of the sanction letter and understand the pros and cons of such conditions.
 

  • Other attached frills on offer
     

Attracting customers by offering them frills with loans is a fad. Free credit card and personal accident insurance tops the list of offers. Before falling for these, analyse whether you really need them and ask for more information about terms and conditions governing them. A well-known friend was sold a ‘free’ credit card. He woke up the next year only to realise that the card was free only for one year. That is the extent of mis-selling being done.
 

Final take
 

Do not fall for an interest rate, or benefit, that is only marginally better. After all banks are into the business of lending. Why would one want to give you loans at a lower interest rate and lose profits when others in the market are earning a higher rate of interest? In your best interest, it is good to be suspicious and ask and consider all the issues mentioned above.

User

COMMENTS

Rajesh Singh

2 months ago

at the time of loan the said there is no foreclosure amount. even today their web site claim that they don't change any foreclosure penalty. but today when I asked for foreclosure statement, they are charging 4% on outstanding. Can I or any one do anything to Bajaj finserv,

REPLY

Swapnil Kulkarni

In Reply to Rajesh Singh 2 weeks ago

Same case happened with me, is any legal action can be taken against Bajaj Finserv?

nagarajan

10 months ago

sir i have a dough that while i switching over my housing loan from hdfc limited to sbi bank. From sbi i got a check of rupees 12,000,00 arround (which was exactly the outstanding amount left with hdfc limited). actually i paid rupees 13,500 as emi every month to HDFC limited. But now i am paying 13000 rupees as emi per month(Usually bank in the period will debit interest component more when compared with principal component you know).
My dough is during first four year of repayment with hdfc bank , i have paid more interest component. i have some dough in this sir please help me

balaji

12 months ago

Dear Sir,
Please help me in below situation if possible from your side. I have taken personal loan 3.2L from ICICI Bank from august 2015 at that time ROI is 17.5%. Paid 6months EMI already. but now the HDFC Bank ROI is 12.5%. Is it beneficial to transfer the personal loan to HDFC Bank?. ICICI takes 2% service charge for preclosure.

ANADI NANDAN DAS

1 year ago

I AM A BORROWER OF HOUSE BUILDING LOAN WITH SBI @ INTEREST RATE 11.45% AND ALSO A BORROW A PERSONAL LOAN WITH AXIS BANK @ INTEREST RATE 17% FOR CONSTRUCTION OF MY WON DWELLING HOUSE. CAN I GET A LOAN AMOUNT OF RS. 18,00,000 LACS WITH LOWER % THAN EXISTING BANK FOR TRANSFER MY EXISTING LOANS. MY GROSS SALARY IS RS. 54000 AND NET SALARY IS RS. 45000. WORKING IN RITES LTD, CONTACT NUMBER IS +918252877769

Raghavendra Shetty

1 year ago

Dear Sir,

Now help me in below situation if possible from your side.

I had taken personal loan of Rs.3 Lacs from HDFC Bank in April 2014 @ROI of 14% and EMI of 8198.

Now there is outstanding principal of Rs.2 Lacs which I would like to transfer the same to kotak mahindra bank only to reduce my monthly EMI.

Kotak bank is ready provide the service with ROI of 13% and with tenure of 4 years with EMI of around 4K.

I wish to know is this a good decision to go ahead with balance transfer or should I continue with HDFC bank.

If I Need to continue with HDFC how I can get my EMI reduced.

My email id is [email protected]

sachit

1 year ago

great article

gaurav

2 years ago

good report...
one ques...is it mandatory for one loan account to complete 3 years before opting takeover with another bank...??? pls let me know
[email protected]

REPLY

sachit

In Reply to gaurav 1 year ago

it totally depends on your loan offering bank scheme, whether it is under locking period or unlocking.

dilip

2 years ago

Dear Sir,
Now help me in below situation if possible from your side.

I have taken loan from Indiabulls housing finance from August 2012 at that time ROI is 10.5% but now the same is 11.0% and when i ask my friends about change of ROI in their loan they said no.And i also search for them but most of the bank not increase their ROI.

So now i want to transfer my loan to BOB or HDFC home loan both interest are same i.e. 10.25%.

From Interest Rate(%)
2-Dec-13 11
28-Aug-13 10.9
14-Mar-13 10.4

Loan Type Rate Based
Sanctioned Loan Amount (in `) 14,71,757
Disbursed Amount (in `) 14,71,757
Installment (in `) 14,643.00
Current Interest Rate (%) 11
Loan Term (Total) in Months 274
Loan Term (Balance) in Months 254

After that indiabulls give me offer to reduce interest rate from 11.0% to 10.25%.

Charge is -5618
Outstanding amount-1437943
Premium-14643
Current interest rate-11%
Tenure in month-253
Tenure in year-21.1

They give me offer
Current interest rate-10.25%
Tenure in month-215
Tenure in year-17.92

I save
Tenure in month-38
Tenure in year-3.17

So please guide me what i do?

Waiting for your favorable response.

Thanks in advance.

Sensex, Nifty ready for a large move: Monday Closing Report

Nifty may be headed for a 5% move from the current levels

 

The market settled in the positive on better-than-expected quarterly earnings from blue chips like Larsen & Toubro, HDFC and TCS. Although the Nifty moved in the same range as of Friday, it ended in the positive, helping the index close above its 20 day moving average. We may now see the Nifty heading for a 5% move from the current levels. The National Stock Exchange (NSE) saw a volume of 51.33 crore shares and an advance decline ratio of 840:915.

 

The market opened in the negative tracking weak cues from the Asian markets, which were subdued in morning trade following a fall in the US markets on Friday on disappointing earnings reports from companies like General Electric and McDonald’s.

 

The Nifty opened at 5,668, down 16 points, and the Sensex also started off 16 points lower at 18,666. Metal, auto, fast moving consumer goods and oil & gas stocks were at the receiving end in initial trade.

 

The market touched its intraday low in early trade itself. The Nifty fell to 5,658 and the Sensex went back to 18,601 at their lows. However, bargain hunting at the lows pushed the benchmarks higher in subsequent trade.

 

The indices ventured into the green around 11.00am on buying support from blue chips like Reliance Industries, ICICI Bank, Bharti Airtel and Larsen & Toubro. The benchmarks continued to stay in the green in noon trade as optimism continued with companies like engineering giant Larsen & Toubro and mortgage lender HDFC posting in-line results.   

 

The gains enabled the benchmarks hit their intraday highs in the last hour of trade wherein the Nifty stood at 5,722 and the Sensex climbed to 18,809.

 

The market settled marginally off the lows. The Nifty closed 33 points (0.58%) up at 5,717 and the Sensex finished at 18,793, up 111 points (0.59%) over its previous close.

 

The broader markets settled on a mixed note. The BSE Mid-cap index fell 0.10% whereas the BSE Small-cap index rose 0.31%.

 

The top sectoral gainers were BSE Capital Goods (up 1.30%); BSE Healthcare (up 1.07%); BSE Bankex (up 1%); BSE IT (up 0.84%) and BSE TECk (up 0.74%). The main losers were BSE Fast Moving Consumer Goods (down 0.51%); BSE Consumer Durables (down 0.46%); BSE Auto (down 0.18%); BSE Metal (down 0.08%) and BSE PSU (down 0.01%).

 

Twenty of the 30 stocks on the Sensex closed in the positive. The key gainers were TCS (up 2.26%); Larsen & Toubro (up 2.17%); Bharti Airtel (up 1.91%); NTPC (up 1.74%) and HDFC Bank (up 1.73%). The major losers were Jindal Steel (down 1.52%); ITC (down 1.24%); Sterlite Industries (down 1.15%); Hero MotoCorp (down 1.01%) and Tata Motors (down 0.86%).

 

The top two A Group gainers on the BSE were—Emami (up 6.37%) and Jaiprakash Power Ventures (up 5.64%).

The top two A Group losers on the BSE were—Exide Industries (down 3.94%) and Coromandel International (down 2.55%).

 

The top two B Group gainers on the BSE were—Bharat Agri Fert & Realty (up 20%) and Somany Ceramics (up 19.99%).

 

The top two B Group losers on the BSE were—Foundry Fuel Products (down 19.96%) and Jaihind Projects (down 13.57%).

 

Out of the 50 stocks listed on the Nifty, 33stocks settled in the positive. The top gainers were Jaiprakash Associates (up 2.62%); L&T (up 2.27%); TCS (up 2.26%); NTPC (up 2.10%) and Bharti Airtel (up 1.93%). Bank of Baroda (down 2.06%); Jindal Steel (down 1.99%); Hero MotoCorp (down 1.675); ITC (down 1.61%) and Ambuja Cement (down 1.43%) were the major laggards on the index.

 

Markets in Asia settled mixed as some benchmarks were weighed down by a 10.3% fall in Japanese exports in September and lacklustre earning reports from the US over the weekend.

 

The Shanghai Composite gained 0.21%; the Hang Seng climbed 0.68%; the Jakarta Composite advanced 0.23% and the Nikkei 225 rose 0.09%. On the other hand, the KLSE Composite declined 0.26%; the Straits Times shed 0.11%; the Seoul Composite fell 0.12% and the Taiwan Weighted lost 0.48%.

 

At the time of writing, two of the three the key European indices were in the positive and the US stock futures were trading higher.

 

Back home, institutional investors—both foreign and domestic—were net buyers in the equities segment on Friday. Foreign institutional investors pumped in Rs80.11 crore into stocks and domestic investors brought in Rs112.05 crore.

 

L&T Finance Holdings (LTFH) today said it has acquired FamilyCredit, an auto finance company, from its French parent for Rs120 crore. The acquisition will consolidate LTFH’s presence in auto financing business in India. The stock fell 0.09% to close at Rs54.10 on the NSE.

 

Rain CII Carbon LLC, a wholly-owned step-down subsidiary of Rain Commodities has agreed to acquire Rutgers NV, a Belgium-headquartered coal tar pitch manufacturer. The Indian company executed share purchase agreement with Triton to acquire 100% stake in Rutgers for gross enterprise value of 702 million euros. Rain Commodities tanked 6.46% to settle at Rs40.55 on the NSE.

 

Electrical equipment maker Havells India is eyeing generating revenues of Rs7,500 crore this fiscal. Besides expanding its distribution network, the company plans to increase exclusive outlets to over 200 by the end of this financial year, raking up revenues of Rs750 crore. The stock closed 0.45% lower at Rs647.50 on the NSE.

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L&T Q2 net profit jumps 42% to Rs1,137 crore

L&T's second quarter net profit rose 42%, while total revenues increased to Rs13,525 crore from Rs11,564 crore a year ago

 
New Delhi: Engineering and construction company Larsen and Toubro (L&T) on Monday reported 42.4% rise in its second quarter net profit to Rs1,137 crore, reports PTI
 
The company had posted a net profit of Rs798 crore for the same period last year.
 
"The company has been sustaining its growth momentum on the back of its strong and diversified business portfolio and increasing international presence. With its execution efficiencies and robust order book, the company is placed well to realise its near term targets and medium tern plans," L&T said in a statement.
 
L&T's total revenues increased to Rs13,524.6 crore for the quarter ended September 2012, from Rs11,564.3 crore same quarter last year, the statement said.
 
L&T recorded higher order inflow at Rs20,967 crore, registering a growth of 30% year-on-year, it added.
 
The maximum orders were from some of the segments like building and factories and infrastructure.
 
"Order book stood healthy at Rs1,58,528 crore as at September 2012. International order book constituted 12% of the total order book," it added.
 
Commenting on the outlook, the company said in the statement, "The quarter has witnessed tight liquidity conditions and volatility in the currency markets. Inflation continuous to remain elevated exerting pressure on operating margins....
 
A few steps taken by the government recently underscore its commitment for accelerating the pace of economic development which provides positive signals for the prospects for the company." 
 
On the back of sharp rise in quarterly profit, shares of L&T settled higher by over 2% at Rs1,668.20 on the BSE, while the benchmark Sensex closed marginally higher at 18,793.
 

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COMMENTS

RAGHUBANSH MANI TIWARI

2 weeks ago

Hi Team,

need one information, I have taken Personal loan 60,000 INR (EMI -2928 INR - 24 Months) from HDFC and i want to transfer this in ICICI coz Company has been changed no so salary account also changed.

so please please share the process to change the same

Dr Anantha K Ramdas

4 years ago

Shareholders are awaiting the news in regard to spin-offs promised by A M Naik years ago!

He recent interview with a leading business daily reconfirms his desire and intention to take "care" of the shareholders.

Mr Naik we are hoping you will keep your 4 year old assurance that spin-offs will be effected so as to share the prosperity with the shareholders.

Just do it!

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