If you find the high-interest rates of your personal loan heavy on your pocket, a Personal Loan Balance Transfer might be the right solution for you! The fast-paced lifestyle of today demands us to keep up. A lot of times, this leads to the requirement of boosting our cash flow. However, sometimes it becomes tricky to afford those loan EMIs in the long run.
The current pandemic times and the subsequent crunch in businesses, jobs and overall economy have further aggravated the need for affordable loans. A pre-existing loan and the inability to get a new one could damage your credit profile as well.
If you are stuck in such a situation, read to find one of the best solutions to this problem.
What does Balance Transfer Mean?
In simple terms, a loan balance means moving your altering the remaining loan amounts and hence the EMIs through lower Personal Loan Rates. How is this possible, you ask?
There are some simple ways through which this can be done, such as:
- Moving your loan balance from one service provider to another that offers a lower interest rate
- Switching from one loan type offered by the bank to a different kind by the same bank
Why Get a Personal Loan Balance Transfer?
The answer is obvious – seeking a lower rate of interest loan would save you money in the long run and reduce the burden of EMIs. When the process is as simple as getting your credit card balance transferred, why not avail it? Perhaps you got the loan when you were more cash-flush and given the ongoing crisis, things changed. It would be unwise to keep paying the same rate of interest that you agreed to when an option to update the rates is available.
The icing on the cake could also be the advantage of a higher loan amount – in case your income through business or salary has improved lately, you could be eligible for an even larger loan amount than earlier. Assuming the rate of interest offered is lower than that of the existing one, you can legally pay off the first and continue with the second – a wise move, is it not?
Will it Work for You?
It may sound too good to be true, but it is not. However, there are certain conditions that the transfer is subject to. For instance, your CIBIL score/credit profile indeed plays a pivotal role in this. Besides that, this process rests at the discretion of the banks or service providers involved. Make sure you check out multiple banks and compare their interest rates before proceeding to increase the probabilities.
What to Know Before Proceeding for a Personal Loan Balance Transfer?
Certain things will do you good if you know them before proceeding towards the process of a Personal Loan Balance Transfer. Although several banks may be offering lower personal loan rates than what you already avail, not all of them might find you eligible for their offer. Do not be anxious about this. Try and apply for several offers until you find a suitable match.
That being said, even the ones you end up with, should be screened before accepting. Check their processing fees and other associated charges. The lower they are, the better it is for you!
Another important test that you should do is comparing both the service providers and the offers. Does the new tenure, amount and rate of interest mean you pay less in the long run? If not, perhaps sticking to the old one should be reconsidered.
How to be More Careful?
Your existing service provider may charge you a penalty since you are pre-maturely closing the loan process. These fees should be communicated to you and could be avoided in cases of transfers within the same bank.
Common sense would also dictate that you read all documents related to this process with the utmost attention. Keeping your financial situation and the lender’s conditions in consideration, try and pay a lesser number of EMIs and a higher amount on each of them. This way, you can also save on the total additional amount paid to the lender in the form of interest.
After all, a lower rate of interest on personal loan balance transfer may be tempting, but could practically be useless if even 1% interest is charged on the principal amount as foreclosure charges. Make sure everything is quantified and studied carefully to make an informed decision.