Unlike before when it was not possible to transfer a loan from one financial firm to another, now it has become quite an easy task and people are opting for this for better services, reduced EMIs, lower interest rates and additional top-up loans from other banks.
What is a personal loan balance transfer?
We will make you understand it in a simple way. It is the process of transferring outstanding personal loan amount from one bank to another which is offering a much lower interest rate than the present bank.
Many of us plan on transferring our loans just with the thought that we will be able to avail lower interest rates and do not consider any other aspects. Banks and other finance firms lower the interest rates and gain business out of it. But we as a borrower should consider the other aspects before applying for a personal loan balance transfer. They need to carefully evaluate the offers that the other banks are offering and then choose the best one to save on the amount payable.
Here are few things you must consider
1. Estimate the total amount: Calculate the total amount of money that you are paying to both the banks. Compare the amount payable because although the new bank attracts by offering you the lowest interest rates, you still have to check if the payable amount is increasing your tenure that ultimately increases the interest amount paid to the bank.
2. Choose the right lender: You can find many lenders in the market who are willing to give you the best price of interest. You are the ultimate decider on whom to choose. Never leave a stone unturned while choosing the loan provider, go through their profile and check for reviews. Choose only when you feel they are the right ones.
3. Know the extra charges: Find out the extra charges that the bank levies upon transferring the loan like processing fee, legal charges, and technical charges. Know the value of these charges and compare them with the benefit of your interest rate that the new bank is offering. Calculate if paying these additional charges is worth the transfer or not.
4. Read the terms and conditions: Read and be aware of the terms and conditions of the new lender. Only if you think you're benefitting from the transfer then opt for a personal loan balance transfer. Their low-interest rates might be attractive but without being aware of the terms and conditions don’t choose the lender.
Don’t just choose the new lender because he is offering a better and lower interest rate. Take time and thoroughly check for advantages and disadvantages and opt only if it brings long term benefits.
Think once that the financial firms are also doing business, and why would they want to get into losses by offering you low-interest rates. They will look for their profits and only then they will offer you the best deal. Just make sure your doubts are clarified before you take the process to the next level.
