How To Transfer Loan Account From One Bank To Another?

bank loan transfer

Bank Loan Transfer

This is the guest post by banksifsccodes.com for providing information on how to transfer loan account from one bank to others. Here you can get idea about how to transfer loan account from one bank to another.

Be it an ostentatious business or a small scale entrepreneurship activity, people often demand loans for plethora of purposes. Mortgages, Auto Loans, Credit Cards, Overdrafts, Personal Loans are a few of the loans people demand on a frequent basis. The psychology behind loans is that sometimes, people like to live beyond their means.

However, if a person has taken a loan at a time when the interest rates where relatively high, the chances are that they are counting a higher interest than someone who secured it in the recent past. This would naturally trigger the person to minimize the premium amount, which is why there exists the option of transferring the loan account to some other bank.

bank loan transfer

Process of Transfer Bank Loan

There are a few steps the individual has to follow for this very purpose.

The first step is always to analyze the situation to acquire some practicality. In case of a fixed interest rate, the individual will have to pay a pre payment penalty to transfer the loan. If the floating interest rate is high transferring the loan account to another bank will be extremely beneficial. It is important to consider the hidden costs involved and the term period of the loan while making this decision.

The next step is to obtain an NOC or no objection letter from the existing bank. Besides, you also need to acquire a foreclosure letter as you are closing the account before the stipulated time along with your account history statement and the list or record of the documents that the existing bank has in possession. This process, depending on the bank, may take a couple of weeks.

In this situation, the existing bank may offer you a slashed interest rate which you can take readily or negotiate with the new bank on this term. The ball may come in your court.

bank loan

As you now have all the necessary documents, the next step is to to apply to the bank of your choice. In case of a home loan, you have to get another NOC from your housing society or from the builder. You will also need the proof of ownership, income etc. The bank now will consider your application and your eligibility for the loan. There is no standard procedure in such cases. Thus it is up to the bank as to how long they will take to complete the process. At this stage, you can decide on your EMI or the loan tenure.

The bank will now assess the application. It may ask you a few more questions and documents to support your request. The entire process can take up to a month but it is important that you remain patient. At this step the bank does a rigorous background check. Once this process is completed, the bank will issue a letter stating the agreed interest rate and the terms and conditions for the loan.

“Note: For online transactions of funds, ifsc code is necessary. IFSC code is of 11 characters (alpha-numeric).  For example south indian bank ifsc code for a particular bank branch is SIBL0000149”

Finally, the individual will find both the banks asking certain documents to complete the transfer. It often happens that the existing bank releases the documents only after they receive the balance principal amount. In such a scenario, representatives from both the banks sit together and sort out the situation. These are some of the steps you have to follow to transfer your loan to the bank of your choice.

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