Can you transfer your student loan from one bank to another?
A balance transfer is a process of transferring high-interest debt from one account to another bank account with a considerably lower interest rate. Various parameters need to be considered before you apply for an Education loan balance transfer.
Eligibility Criteria
The loan must be a first-time takeover.
The loan requires to be fully disbursed at the time of take-over.
Repayment should have been started and the borrower must have a good CIBIL score.
Know about the processing fees and other related charges before you apply for the Education loan transfer from one bank to another. For some banks charge processing fees while others don’t. Depending upon the number of charges required overall, consider if the transfer would be a net benefit or net loss.
Collateral to the outstanding ratio:
In case you have already paid back the majority of the loan amount don’t offer the original collateral to the bank. Instead, offer your new bank a lesser amount of collateral and utilize the higher amount collateral to take up another loan.
Read all the terms and conditions of the bank before finalizing the loan transfer.
While the new bank will attract you with an extra-low annual percentage rate (APR) sometimes as low as zero per cent, do not fall prey to such schemes as the promotional offer may not last until the end of your repayment period.
The transfer of student loans to another lender can be beneficial because of the reduced rate of interest from the new bank but be aware of the pros and cons of loan transfer as you might end up saving money from the reduced interest rate but the bank might charge rates in the form of processing fees or other allied charges for the transfer. Consider studying the recent trends of loan transfer to avoid falling prey to interesting interest schemes.
