All About Balance Transfer and Top Up in Car Loan
10 Jan, 2025
Synopsis
A Car Loan balance transfer may offer a lower interest rate and flexible repayment options.
A new lender may offer both car balance transfer and top-up at a competitive rate.
Having a good credit profile may help you qualify for a Car Loan balance transfer.
Do you have an existing Car Loan? Has your credit score improved in recent times? Are you looking for a better rate of interest from another lender? If it’s a “yes” to all the questions, this can be the right time to consider a Car Loan balance transfer. Also, with an existing Car Loan, you may need additional funds for personal or business needs. While you can apply for another loan, you can consider a top-up on your existing Car Loan. Here’s an understanding of how Car Loan balance transfer and top-up works, the benefits of Car Loan balance transfer and the eligibility criteria.
How Car Loan Balance Transfer Works
Let's understand the Car Loan balance transfer process with an example.
You have an existing Car Loan from Bank A, but you find Bank B offering a better rate.
You approach Bank B and get your documents assessed and they are happy to provide you a Car Loan balance transfer.
You don't have to worry about how much you owe to Bank A. The number of EMIs you've paid towards your Car Loan will be considered, and the outstanding balance will be transferred to Bank B.
After a successful Car Loan balance transfer, you'll no longer be indebted to Bank A.
What are the Benefits of a Car Loan Transfer?
A Car Loan balance transfer from one lender to another provides multiple perks for an individual.
Potentially Lower Interest Rates: You may secure a lower interest rate, reducing monthly payments and the overall cost of the loan.
Better Loan Terms: You can access favourable terms to better manage your Car Loan.
Improved Financial Flexibility: A balance transfer may provide opportunities to adjust your financial commitments to better suit your current situation.
Eligibility Criteria for Car Loan Balance Transfer
A Car Loan balance transfer is a special offering from a lender. So, the eligibility criteria can vary. However, in most cases, lenders expect a customer to qualify certain conditions.
The minimum age for a customer should be 21 years.
The customer should be <=65 years at the end of the loan tenure.
A customer must have a minimum loan repayment record of 9 months without default.
How Top Up Car Loan Works
Let's say you currently have an existing Car Loan with HDFC Bank with a balance of ₹5 Lakh, and you’re looking for additional funds to cover a home renovation. You can opt for a top-up Car Loan to meet this need. Here’s a step-by-step example of how the process might work:
Your current Car Loan is ₹5 Lakh with an EMI of ₹15,000 per month. The bank requires that the original Car Loan has been active for at least nine months and that you have a good repayment history.
You approach the bank and express your interest in a top-up loan.
You provide the necessary documents
HDFC Bank reviews your current loan, repayment history and financial documents.
They conduct a credit check to ensure you’re eligible for the top-up amount.
The bank approves a top-up loan of ₹1,00,000 at an interest rate of 10%. The repayment period for the top-up loan is set for 3 years.
Your existing EMI remains ₹15,000, and an additional EMI of ₹3,500 is added for the top-up loan.
Once you accept the terms, ABC Bank disburses ₹1,00,000 to your account, which you use for your home renovation.
You now pay a total of ₹18,500 per month, combining the existing EMI and the new EMI for the top-up loan. Your repayment schedule for the top-up loan will last for 3 years.
Transfer Your Car Loan to HDFC Bank
HDFC Bank’s Car Loan balance transfer promises competitive interest rates, quick approval, and flexible repayment options. Click here to calculate your eligibility and learn more about HDFC Bank Car Loan Balance Transfer.
Start your Xpress Car Loan journey
*Disclaimer: Terms and conditions apply. The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Credit at sole discretion of HDFC Bank Ltd. Other charges and taxes as applicable. The offer is unconditionally cancelable without prior notice. Interest rates are subject to change. Please check with your RM or closest bank branch for current interest rates.
