General Insurance

Insurance provides protection against risks that may damage any of your possession, be it property, house or vehicle. Car insurance is a type of motor insurance policy which helps the policyholder manage financial losses associated with various risks, such as car accident, theft or loss of the car.

What is Car Insurance?

Car insurance, which comes under vehicle insurance policy, is mandatory in India under the Motor Vehicles Act, 1988. It provides financial support to the car owner to manage situations like repair costs due to accident, theft or loss of the car. This insurance plan includes a compulsory third party coverage to manage any injury or damage to another person, vehicle or property caused by the insured car.

Types of Car Insurance

A car insurance can be divided into 4 broad categories. They are:

Comprehensive Policy: It is an all-inclusive plan which provides end-to-end coverage for all the risks related to the car, first party, co-passengers and third party. It also provides coverage against all natural disasters or human-made catastrophes, including earthquakes, landslides, floods, strikes and riots.

Co-passenger Protection Coverage: Some insurance providers offer personal accident coverage for co-passengers, though this can be availed by paying an additional premium. In case of the death of the passenger or the one who is driving, you can get 100% compensation for it. If there is any type of permanent disability from any injury, a 100% compensation can be claimed.

Third Party Liability Insurance: Law in India mandates the purchase of this policy for everyone. It provides coverage against liabilities arising from any harm caused to third-party and property by the insured car.

Personal Risk Coverage: A policy usually provides coverage only for the owner of the car. However, instead of the driver, any other person in possession of a valid license can also be covered by purchasing personal injury coverage rider.

What all it Covers?

The coverage provided by car insurance usually varies from provider to provider. However, some situations and cases are covered by almost all of them. Let us look at some of the points:

A car insurance policy protects the driver/owner of the car in case he/she meets with an accident while driving
It covers any legal or financial liability arising due to injury to a person or damage to another vehicle or property by the insured car
The policy covers any loss or damage to the car due to the following reasons:
- Accidental and external damage
- Fire and explosion
- Riot and strike
- Malicious act
- Burglary, housebreak, theft
- Natural calamities like earthquake, landslide, storm and flood
- Terrorism

How Car Insurance Functions?

It makes sense to understand how a car insurance functions. This will help in planning better for the coverage that you need as per your requirement.

First you need to choose the cover you need for your vehicle. This will depend on the type of the car you own, the place where you live and its engine capacity. Since third party insurance is compulsory, the policyholder has the option to choose between comprehensive policy and personal accident cover
After this, the insurance provider inspects the car to be insured to calculate the insured declared value (IDV) by considering various factors, such as car brand, model number, manufacture year, claim history, etc.
In case of any accident, damage or loss of the car, the policyholder first needs to intimate the insurance company by calling the toll-free number
To process the claim, s/he also needs to submit the required document for reimbursement
In case of a cashless claim process, the surveyor from the insurance provider will analyse the estimate prepared by the garage and will directly pay to the garage after the repair
In case of reimbursement claim mode, you have to make the payment after the repair and the provider will reimburse the amount later

Eligibility Criteria

It is compulsory for all types of car, old or new, to get a car insurance, along with a third-party insurance coverage. To be eligible to get this insurance, a person should be 18 years and above, a citizen of India, should possess a driving license and should possess the RC of the car.

Claim Process

In case of any eventuality, you need to make a claim with the insurance company to get the compensation for the financial loss. It makes sense to understand the steps to go ahead with the claim process.

The first step while applying for a claim is to immediately inform the insurance provider after any accident or damage or theft. Then, you can apply for the claim by producing related documents like claim form, a copy of the registration of the vehicle (RC), and other documents
One can also get a cashless claim if one repairs their vehicle in a garage covered under the network of the insurance provider. The repairs and replacements done in network garages are cashless as provided by the insurance companies
In case, the policyholder takes his vehicle to the garage not covered under the network, he would have to pay for the claim which can later be reimbursed from the insurance company

Documents Required For Claim Process

In case of accident or damage done to you, car or to the third party, intimation to the insurance company is important. Along with that, following are the essential documents which need to be submitted for timely claim:

Duly filled in claim form
Copy of the insurance policy
Copy of the driving license of the person driving the vehicle at the time of accident
FIR, in case of third party damage, death, bodily injury
All the sets of keys, service booklets and warranty card in case of theft
Repair bills and payment after the repair is being done

Time Taken to Settle Claims

Car insurance companies have two options to settle the claim; one is through cashless where the claim is settled directly by the insurance company, if the insured gets the vehicle repaired at the network garage. The other is reimbursement claim, where the insured pays the bill and the insurance company later reimburses the amount.

Add-on Covers

Apart from the standard coverage provided by the provider, you can also opt for additional benefits, called add-ons, by paying an extra amount. These advantages vary for every provider. Some of the add-ons are:

Zero depreciation cover: As your car ages, the value of the parts of your car depreciates. Thus, during claims, the compensation is given after deducting this depreciation amount. But on getting this cover by paying an extra amount, the claim amount will include the depreciation amount
Engine protect cover: A comprehensive car insurance fails to protect the engine; however, on getting this extra coverage, the provider will cover the damage done to the engine
Roadside assistance cover: As part of this add-on cover, the provider will provide round-the-clock assistance for situations like arranging for fuel, tyre change, a mechanic, etc.

Exclusions

A car insurance provides mental peace and relaxation after buying a car; however, the insurance does not cover all types of cases. Some situations not covered, also called exclusions, are:

Wear and tear
Depreciation or any consequential loss
Mechanical or electrical breakdown
If the damage caused by a person driving the car is under the influence of alcohol or drugs

Renewal Process

One can renew his or her policy through online mode after the required inspection either by you or by a surveyor; following are the steps:

Visit the insurance provider page and click on renewal tab under car insurance
Proceed by entering your car policy, registration or engine number and click on renew my policy
After entering the required information, you will be able to see your current policy. If needed, you can buy add-on or optional coverage or go ahead with paying premium

Companies Offering Car Insurance in India

Almost every other insurance company provides motor insurance in India. Some of insurance companies providing car insurance in India are:

Reliance General
Bharti AXA
Bajaj Allianz
Oriental Insurance
Tata AIG
HDFC Ergo

Important Aspects

Low premium costs are usually the sole deciding factor while choosing a car insurance product and this could also mean not having an adequate protection cover. You should consider other important points as well before buying a policy.

The car insurance premium is directly linked to IDV of your car. Sometimes people choose to decrease the IDV to be able to pay a lesser amount in the premium but doing this causes the value to be written off completely in the event of an accident. This is why it is recommended to choose a policy which will provide the highest IDV even if it means to pay more amount as a premium.
It is ideal to go for comprehensive insurance cover as it will provide complete protection for the damage caused to your car and self in an accident. Furthermore, it will also protect your car against thefts, accidental fires and other damage. One should not overlook personal accident cover,as it will provide protection against any physical loss or disability during a car accident.
Third party insurance is mandatory for everyone as per the Indian Road Safety Act and Indian Motor Vehicles Act. So, if you are buying a car for the first time, make sure to get third party insurance cover before hitting the roads.
At the time of making your car purchase, your car dealer may offer you an insurance policy that may not necessarily be your best option. As a thumb rule, buy a car insurance policy only after comparing features and quotes from multiple insurers.
The policy seeker can choose between additional covers to customise their policy as per their needs. You can opt for Personal Injury Protection which is for the protection of you (owner) and any other who drives. Other coverage that you can consider are – collision cover, risk coverage for the different accessories and quick road assistance add-on.

Home Loan Balance Transfer

Home Loan Balance Transfer helps you reduce your EMIs by moving your outstanding loan from other financial institutes to the one which offers lower interest rate.

Home Loan Balance Transfer or Refinancing or simply Balance Transfer is the process that allows you to benefit from the lower interest rate offered by the other lender. If you have an existing outstanding home loan with one borrower, you can make a home loan transfer, that is, shift the remainder amount to a different borrower who charges a lower rate of interest, the process is termed as a home loan balance transfer or refinancing. This unique home loan transfer service helps a customer avoid high applicable interest rates as listed by one home loan lender and migrate to a lower interest rate structure with another lender.

So why one would need a balance transfer? A home loan involves a significantly large amount of money and therefore, the interest rate on the loan is a matter of concern for everyone who decides to take a home loan. Home loan interest rates may be high so one of the most common ways to reduce interest rates is to either talk to the bank that has provided you with the loan to reduce it or go for a transfer of the balance on an existing home loan or in layman terms, shift your home loan to a bank offering lesser rate.

Key Features of Home Loan Balance Transfer

Transfer the outstanding balance of you existing home loan to another bank or from one lender to another.
There is a fee usually equal to 1% of the loan transferred that is payable to the new lender for home loan by the borrower.
In most cases, the home loan balance transfer application is treated similar to a new home loan application.
The balance transfer on an existing home loan can only be availed after a pre-determined time period as mentioned on the original loan agreement.
When the transfer is completed, the borrower owes the transferred principal loan amount plus applicable charges to the new lender instead of the original one.

Reasons to Apply Home Loan Balance Transfer

The most important benefit of availing a home loan balance transfer is saving money. The difference in interest rates between the two lenders, the tenure of the loan and the amount outstanding are the three primary contributing factors. If you see a significant benefit in the home loan interest rate, it may well be worth considering a switch to the new home loan lender. You must first and foremost identify the objective for availing of a balance transfer of your loan. Then you must just ensure that your new home loan helps you bring down your overall cost of acquisition. The reason of switching the lender could include:

Reducing the EMI burden every month
Reducing the amount of money to be paid as the interest on the loan
A person could also consider applying for a balance transfer simply to avail attractive discounts and benefits being offered by the other lender.

Eligibility Criteria to Apply Home Loan Balance Transfer

Any salaried, self-employed professional or self-employed businessperson with an outstanding home loan that has been regularly serviced can apply for a home loan balance transfer. Though all loan providers have different eligibility criteria, some basic ones are as follows:

You must be of Indian nationality and of an age 21 to 60 years. Whereas, self-employed individuals are eligible for the transfer up to 65 years.
Your credit rating should not fall in the run-up to your loan transfer application. Irrespective of your credit rating during the initial loan application, if the rating dips by the time of transfer, banks might reject your application for refinancing.
You should either be employed by your current organization for a certain number of years or your company should have been operating for a time period specified by the lender. This period is generally 2 years.
You should have some monthly repaying capacity or the required minimum salary.
Some banks may also require a minimum gross family income specified by the lender.

Documents Required for Home Loan Balance Transfer

Your home loan balance transfer is treated similar to a fresh home loan application by the bank you are transferring the loan to. Therefore, while applying for your home loan to transfer to another bank, all the documents provided during the initial home loan application need to be resubmitted. These documents are then revalidated and vetted by the bank or NBFC providing the loan transfer facility. Documents are the most important element while taking up a loan because they best help the bank to identify the loan borrower to make sure of their loan borrowing and loan repayment capabilities. The prerequisite key documents for home loan transfers are the following:

Passport-size photographs
Completely filled application form for transfer issued by the financial institution.
Latest three months’ Salary Slips indicating break up of Gross salary that is the Basic Pay, House rent and Net Salary after deductions, if any.
Six months’ bank statement, reflecting salary credits updated within 15 days before the loan application.
Identity Proof (Any One): Pan Card, Passport, Driving License or Voter’s ID card or employee identity card (as identity proof and signature proof in case of government employees).
Proof of address
Proof of Age (Any One): 10th or 12th Marks Cards, PAN Card or Voters ID Card.
If you are a self-employed professional or businessperson, then instead of Points (3.) and (4.), you need to provide documents proving the existence of your business (for businesspersons) and academic qualifications (for professionals) ; and financial statements for both.
Bank statements from wherein the home loan EMIs were deducted amounting to last 12 months of the account.
The Loan statement copy and complete set of documents relating to the property that is currently in possession of the present home loan lender.

Top Banks offering Home Loan Balance Transfer

Home Loan Balance Transfer Rates of Top Lenders

Lender	Lowest Balance Transfer Rates	Processing Fee (Exclusive of GST)
Kotak Mahindra Bank	6.50% onwards	Up to 0.50% of the loan amount plus statutory dues
LIC Housing Finance Ltd.	6.66% onwards	As applicable
ICICI Bank	6.75% onwards	Processing fee of 0.50% of the loan amount plus applicable taxes.
State Bank of India	6.75% onwards	Up to 0.4% of the loan amount (Min. of Rs 10,000 & Max. of Rs. 30,000)
HDFC Ltd.	6.70% onwards	Salaried/Self Employed Professional – Up to 0.5% of the loan amount or Rs. 3,000, whichever is higher Self Employed Non-Professional – Up to 1.5% of the loan amount or Rs. 4,500, whichever is higher
Bank of Baroda	6.75% onwards	Flat: Rs 8,500/- (upfront)
Union Bank of India	6.80% onwards	0.50% of the loan amount (maximum Rs.15,000)
Axis Bank	6.9% onwards	Up to 1% of the loan amount subject to a minimum of Rs. 10,000
Canara Bank	6.90% onwards	0.50% (Min. Rs. 1,500; Max. Rs. 10,000)
IDFC First Bank	6.90% onwards	Up to ₹10,000
Federal Bank	7.65% onwards	0.50% of loan amount (Min. Rs. 10,000; Max. Rs. 45,000)
L&T Housing Finance	7.7% onwards	0.25% of the loan amount
Standard Chartered Bank	7.99% onwards	Up to 1% of the sanctioned amount
IIFL	8.20% onwards	Up to 2% of the loan amount
Indiabulls Housing Finance Ltd.	8.80% onwards	Up to 2% of the loan amount
Yes Bank	8.95% onwards	Up to 2% of the loan amount or Rs. 10,000, whichever is higher
Piramal Capital & Housing Finance	9.75% onwards	Up to 3% of the loan amount

Home Loan Balance Transfer Interest Rates as of 5th October 2021.

The housing loan balance transfer rates in the table are subject to change anytime without prior notice

Guiding Steps to Home loan Balance Transfer:

Due to unalike interest rates offered by different banks and loan lenders for existing and new customers, several customers get upset with their high home loan interest rates. This is the point when you can consider a switch between banks and transfer your home loan to a bank offering lower rates compared to the existing one. Here is a guide to get you in the clear about Home loan Balance Transfers-

Step 1: Analyze cost benefits being offered Decide the viability of transferring your home loan by analyzing the current situation. Here are some guidelines to help you with the analysis:

On home loans with fixed interest rates, the lender will charge the borrower with a pre-payment penalty to transfer the loan.
Whereas, on floating home loans of high value and interest rates, generally no penalties are charged. Hence, transferring your loan to a lower interest rate will be beneficial.
Transferring to long tenure loans are beneficial too as longer time period implies higher benefits and lower EMIs.
Also, do keep an eye out for hidden costs in the process.

Step 2: Get NOC from the existing bank Getting a No Objection Certificate (NOC) from your current home loan provider is a key step in the home loan balance transfer process. The other document that is necessary to complete this step of the balance transfer system is a foreclosure letter along with the complete list of documents held by the bank as well as your payment history. In some cases, your current bank may try to retain your business by offering you a reduced interest compared to what you are currently paying. Make sure you analyse such an offer as well as other offers thoroughly before settling on a specific one.

Step 3: Apply To New Bank Now you must have all the required documents ready to transfer existing home loan to another bank of your choice. You will also require getting a No Objection Certificate from your housing society or builder to be submitted as a proof of ownership to the bank along with all other documents. Then, bank will check your ability to pay the monthly installments. While making the application for balance transfer, you can decide to top up the balance on your home loan, reduce tenure or change your home loan EMIs.

Step 4: Credit Approval At this step, bank will evaluate your application and decide your eligibility for home loan transfer. Extensive background checks and history assessment will be carried out before they give you a credit approval. These verifications include re-evaluation of your home loan, checking your credit history, checking the authenticity of ownership and document valuation. Once the issues related to Credit Approval are resolved, the home loan provider would provide you with documentation that mentions key information such as the new loan interest rate, tenure and other features. Once this step is completed it is time you decided whether to go through with the balance transfer to stick to your current loan provider.

Step 5: Documentation with Chosen Loan Provider At this point, if you decide to finalise the home loan transfer process, you would be required to complete the documentation process with your selected loan provider. They may require a few extra documents to complete the whole transfer process. Here, you have your home loan transferred at a low interest rate and better benefits.

We are here to help you in Home Loan Balance Transfer

Banks are very careful when allowing shifting your home loan, especially banks which take on the responsibility of the transferred loan amount. And that is where PaisaBazaar can help you.

Our Home Loan Balance Transfer Calculator can help speed up your decision-making process by sifting through all the offers available based on the information provided by you. Our online tool automatically generates a comprehensive comparison report based on your requirements to help you make an informed decision. Our calculator takes everything into consideration, such as your total and outstanding loan amounts, remaining loan tenure and the existing rate of interest on your home loan. We will also provide you with the fine print of the transfer agreement to aid your decision.

FAQ's

Q. When is a home loan balance transfer a good idea?
Ans. The key reason for transferring a home loan from one lender to another is to benefit from a lower interest rate provided by the new lender.

Q. Is there a limit to the amount I can transfer?
Ans. Yes. The maximum balance transfer amount is equal to the outstanding amount of the home loan.

Q. When should I not consider transferring my home loan?
Ans. You must not consider shifting your home loan if one of the following is applicable in your situation:

You have been repaying the loan for a long time now
Your current bank has a prepayment penalty
You are planning to move out of the property in the near future

Q. Does my current credit score affect my chances of successfully completing the transfer?
Ans. In case your credit score has dropped significantly since you applied for the initial home loan, it might affect the process. As the balance transfer process works similar to applying for a new home loan, your credit score and history would play a key role in determining your eligibility for the home loan balance transfer.

Q. Will my refinance be affected by the prepayment penalty?
Ans. Most banks today wont have a prepayment penalty in the first place. But if your bank has it, then you can ask your new lending bank to take it into account. This will vary from bank to bank.

Q. How much time will it take to transfer my home loan from another bank?
Ans. Transferring a home loan is treated like buying a home loan all over again by the bank, the loan is transferred to. Therefore, it might take 15-20 days for the home loan to be transferred to the new bank.

Q. What is a top up loan?
Ans. For instance, if the property value of your home climbs much higher from its original price at the time you took the home loan and you might require more finance for your home renovation. In this situation you can add to your loan. This is called a loan top up.

Q. Can I get a top up on my loan along with the transfer?
Ans. Yes, depending upon your eligibility, the loan issuer can offer you the option to top up on the home loan to be transferred to the new bank but there may be processing and legal charges applicable.

Q. What processing fee is charged on home loan transfer?
Ans. Processing fees on transfer of home loans range from 0.5% to 1% of the loan amount.

Q. Is there any interest saving in EMI by home loan transfer to another bank?
Ans. The precise reduction in EMI varies based upon:

Outstanding principal amount
Existing rate of interest charged by your bank
Rate of interest presently offered by the new bank
Your current EMI

Q. What steps does a home loan takeover involve?
Ans. The simple steps following below are involved in transfer of your loan:

Check the current rate to calculate interest savings
Estimate the cost based on the various fees and charges
Shortlist a new bank and decide if a top up loan is needed
Collect the property documents deposited in your existing bank, and the foreclosure letter as well
Apply for loan with the new bank along with the Xerox copies of property documents
Obtain sanction letter to execute new loan agreement
Get disbursement from the new bank by way of cheque or demand draft in favor of existing bank, and then deposit the same
Obtain and deposit property documents from old bank to new bank

Q. What precautions must be taken when transferring a home loan?

Check and analyze the interest rate track record of the new lender and ensure that the lower interest rate offered by the new lender is genuine. You can compare offers by various banks on our website and ask our expert team for suggestions and clarifications.
Assess the service quality of the new lender to make sure they meet your expectations. Lower rates shouldnt come at the expense of below par service.
Check the benchmark rate that is the base rate and the prime lending rate. Loans which are base rate benchmarked are more transparent and are preferred over lending rate benchmarked loans.
Whether the spread is variable or fixed is an important question. The two parts of an interest rate applicable on floating rate loans consists of a benchmark rate along with the spread above it. The benchmark rate is expected to change over time, but the spread is supposed to stay fixed, except in case of default. You must avoid loans having variable spreads and opt for floating rate loans that have a varying interest rate only with a change in the benchmark rate.
Estimate transaction costs which would include the processing fees, documentation charges and stamp duty.
Issue notice to the existing bank prior to applying for another. Check your loan agreement carefully and make sure that due notice is given to or waived by your existing bank.

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