Personal Loan Balance Transfer
While personal loans come with a ton of benefits, the interest rates are generally on the higher side. If you have availed multiple personal loans at the same time then you may be feeling the pinch in your pocket.
A personal loan balance transfer would be your best bet in such situations.
What is Personal Loan Balance Transfer
A personal loan balance transfer refers to transferring the outstanding balance in your existing loan from one lender to another due to better conditions offered by the second lender. It could be a lesser rate of interest, longer repayment tenure, better prepayment conditions, better service from the lender, etc.
Earlier, a balance transfer was allowed only on credit cards. But now a balance transfer can be done on all kinds of loans like personal loans, car loans, home loans, etc.
How does Personal Loan Balance Transfer Work?
As the term suggests, loan transfer indicates transferring your existing loan from your current lender to a new one.
In order to do this, you must first find a lender who will offer better terms and conditions such as low interest rate.
While certain lenders allow you to transfer your existing loan, others offer a fresh loan which can be used to pay off your older debts.
But, there are some factors that you should consider here such as your existing loan may have a fixed payment tenure (the most common being 12 months) or there may be a prepayment penalty or even additional processing fee. The bank/lender taking over your loan would not make these payments. It would have to be done by you.
The eligibility for loan transfer will also depend on your age, CIBIL score (credit score), take-home income, type of employment and other existing loans etc.
Should You Go for a Loan Balance Transfer?
Deciding whether to opt for a balance transfer or not will depend on various factors such as -
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The difference in interest rates between the existing and new loan
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Prepayment penalty and processing charges
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Remaining tenure of the loan
You should opt for loan transfer only if you end up saving some amount.
But, if you wish to opt for personal loan balance transfer for reasons such as extension of tenure or due to bad service offered by your existing lender, then you may go ahead even with minimal benefits on the monetary front.
Where Should You Apply for a Personal Loan Balance Transfer?
You could apply for a loan transfer with any financial institution; it could be a bank where you have your savings account or NBFCs.
Advantages of a Personal Loan Balance Transfer
Here are some of the advantages of personal loan balance transfer -
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Possibility of a Lower Rate of Interest
The biggest advantage of a personal loan balance transfer is that you could get a loan with a sufficient lower rate of interest which could translate into bigger savings.
For example, currently (Oct 2021) the repo rate announced by RBI is 4%. This is 2% lower than the rates 2 years back. If you are stuck with higher rates, this might be the right opportunity and make use of lower interest rates for lowering your monthly EMIs.
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Ability to Avail a Top-up Loan Along with Balance Transfer
Many lenders also allow the applicant to apply for a top-up loan along with a loan transfer. This is helpful as you wouldn’t have to go through the entire process of applying for a loan again.
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Get Better Terms and Conditions
The terms and conditions associated with a loan vary between lenders. A personal loan balance transfer might be your chance to opt for a lender for better service or better terms and conditions.
In Conclusion
While a personal loan balance transfer may help you reduce your existing EMI or get you better terms, you should always remember to pay EMI repayments on time after the transfer.
However, if you wish to avail a new loan instead of opting for loan transfer, you can always opt for a personal loan from Money View. Not only are the loans disbursed within 24 hours of application approval, the application process is incredibly easy and the documentation requirements are minimal.
