I was eligible for receiving a car loan and bought my dream car Mahindra XUV in 2012. My bank provided the option to finance up to 90% for the car on its road price. I had enough savings to pay the down payment. Hence, I requested them to sanction Rs. 7 Lac as the loan amount. The interest rate was 10.50% per annum and the tenure for repayment was 60 months. I was a first-time borrower and was satisfied with the deal.
During one weekend my family planned a trip to Mysore with my cousin Sudhir’s family. Sudhir was impressed with the condition of my SUV. I told him that I took good care of the car and never missed a car servicing appointment. The mechanic near me was skilled and regularly reminded me of the car wax and car wash schedule. Sudhir asked me about my financier and the ongoing loan schedule. I informed him that it was almost 24 months and I always paid my EMI before the deadline. He recommended me to avail the car loan balance transfer facility. I did not know anything about it and curiously asked Sudhir to explain it to me.
Sudhir said it was the process of transferring the outstanding balance of a loan from my existing bank to another bank. I had paid all the EMI’s on time so other banks would offer me a reduced interest rate and I could save a significant amount. Sudhir had recently opted for the balance transfer on his car loan and advised me to meet his banker for further details.
I visited Sudhir’s banker and told him that I wished to avail the balance transfer facility. He carefully studied my loan documents and offered an interest rate of 9.35% given that I transfer my loan immediately. I requested him to brief me on all the particulars and hidden charges.
He assured me of zero no hidden charges. The bank would only charge 1% of the total outstanding loan amount + 18% GST as a balance transfer fee additionally. I availed the facility and ended up saving almost Rs. 27000. If you are planning to buy a car or already have one, you can also save a fortune by following these simple tips.
To avail a car loan transfer facility it is mandatory to maintain an excellent repayment history. By paying all your EMI’s before the deadline you can negotiate with other banks for a better interest rate. Lenders prefer sincere clients and if you have an excellent repayment history they will offer you the best deal.
Car loan does not require any guarantee. Your car will be an asset for the lender if you fail to repay the loan. If your car is not maintained the lenders might not offer you the balance transfer facility. Therefore, consider car repair and servicing seriously. It will regulate your car’s performance and enable you to save on your loan.
Do not accept a deal without comparing it. Visit multiple lenders and compare the deals offered by all them. If you are confused, take an experts opinion before finalizing the deal.
You should avail the car loan balance transfer facility after repaying for 1/3rd of your total loan tenure. You cannot save more if you avail the facility in the last year or a few months before the completion of the loan tenure.
You must avoid multiple balance transfers because every time you avail this facility you have to pay the balance transfer charges. And it will not add to your overall savings.
Please read the loan agreement carefully before transferring your car loan. It is a simple but lengthy procedure. Clarify all your doubts with the new lender and carefully understand the repayment structure. If you play it right you will end up saving a fortune.