- It’s a simple process with no complications
- You can save a lot on interest
- You can avail better offers with favorable terms
- Reduces your EMI
Money is indeed sweeter than honey. And personal loans are the one which helps you get money easily in your financial tough times. Being a rational human being always opts for low price benefits just like a rational borrower who keeps searching for ways to lower the cost of loans and advances he/she is availing. One of the ways of lowering the cost of your personal loan is by opting for a balance transfer. This is an easy way and is surely beneficial.
Personal Loan Balance Transfer
Personal loan Balance Transfer is an easy concept where you can transfer your ongoing personal loan from a lender to another lender at a specific interest rate. This is basically done to avail a lower interest rate and better offers. However, many lenders have a lock-in period under which you can transfer your loan only after paying a particular number of EMIs. This lock-in period varies from lender to lender, but in general, it is for 12 months.
In a balance transfer, you transfer the remaining unpaid loan amount to another bank of your choice that offers you a lower interest rate.
By opting for a balance transfer you need to pay comparatively lower EMIs which makes you a bit relaxed and can reduce your tension towards your finances.
When should you go for a Balance Transfer?
- If and only if you get a lender who is offering the same facility at a lower rate of interest.
- The new lender is ready to offer you better terms & conditions as compared to your existing loan.
- If you get a tenure and payment system of the loan which is as per your requirement.
Is Personal Loan Balance Transfer Beneficial?
If you are availing a personal loan balance transfer then definitely it brings you some kind of benefits. These benefits include:
The first thing you get is a low interest rate.
You may also get a longer tenure period. On a general basis, a balance transfer is somewhere good for the borrowers.
But here an important point to consider is- if you are paying your EMIs for a longer tenure it automatically enhances your payable interest towards it. So, before you opt for it, it is important to use an EMI calculator and calculate your total cost of borrowing with both the lenders.
Things to Consider Before Transfer Your Personal Loan
- Processing Fees
Generally, you need to pay a processing fee when you avail a loan, so when you go for a balance transfer you need to be extra careful. This is because you have already paid a processing fee when you had taken the loan in the first place. But, when you switch your lender, you need to pay another processing fee to the new bank as well. So, here you need to calculate the total cost of both your borrowings and compare whether it will be beneficial to switch or not?
- Total Cash Outflow
Generally, you get attracted to the lower interest rate & tempting offers but did you think that at the same time your tenure period is also getting longer. It is always necessary to calculate how much money you are paying out to the lender. The total cash outflow must not be more than what you are required to pay.
- Read the fine prints Carefully Before You Sign the agreement
Make sure you read and understand the lender’s terms & conditions carefully before you jump into the loan agreement, especially the hidden cost should be pointed out beforehand.
Remember it is always wise to look for ways to reduce your financial burden and personal loan balance transfer is among such ways that can reduce your financial burden. But, trusting anything blindly is never wise. You should only go for a balance transfer after researching and comparing it well.