The procedure of moving your outstanding personal loan amount is known as a personal loan balance transfer. This can be done from one bank or Non-Banking Financial Company (NBFC) to another. Earlier, this process was only used to transfer the outstanding debt on your credit card to another issuer. However, it is now applicable to personal loans, home loans, and other types of loans as well.
Balance transfer personal loan
When should you think about getting a balance transfer personal loan? Here is the list:
- You have high EMIs A reduced interest rate reduces the interest on your EMI amount, lowering the entire EMI value.
- You wish to increase the amount of your existing loan If you need spare funds and have a strong credit score, you can get them by renewing your loan.
- You are unhappy with your present lender You can move to a new one that offers better conditions, such as no processing costs and no prepayment penalties.
- You wish to raise your credit score You can move your debt to get better terms and repay it sooner and more efficiently. As a result, your credit score will increase.
Reasons to consider a balance transfer personal loan
Here are the reasons to consider a balance transfer personal loan:
- For a reduced interest rate This is one of the benefits of the transfer option for a personal loan amount. It lowers the interest rate, reducing the lender’s interest burden through cheaper EMIs. In most cases, the new lender will provide a reduced interest rate on the loan transfer. To see how this works, consider the following example: Assume you already have a personal loan with a Rs. 2 lakh balance and a 12% interest rate.The payback period is one year. This brings the EMI to Rs.2000. If you want to transfer this remaining balance to another supplier, you will receive a cheaper interest rate. This lowers your total payback amount. The borrower saves a huge amount of money this way.
- You have the opportunity to increase your credit score By choosing a balance transfer and returning the personal loan faster, you have a way to strengthen your credit score.
- For appealing features and tweaks The new lender may provide bigger discounts and perks for your loan. This includes no processing costs, no prepayment penalties, and so on.
- Choose a bank with superior service Lack of better service is one of the reasons why borrowers transfer to a new lender. A balance transfer allows users to exchange accounts with a bank that provides superior customer service.
- You can acquire a loan increase on your current loan You should have a solid credit history and a good payment history. If so, the new lender may offer to top up your existing personal loan while you transfer the amount to them. As a perk of the balance transfer, some lenders may offer to lengthen the time you have to pay off your current balance.
- Loan supplementation Most banks provide top-up loans in addition to personal loan balance transfers. These have highly competitive prices and a significant rate of interest.
The eligibility for a personal loan balance transfer is the same as for a personal loan and varies by lender. However, the vital points that most creditors are looking for are as follows:
- Should already have a personal loan with a bank/NBFC
- The minimum balance transfer amount should be Rs. 50,000.
- Should have a clean payback record on a current personal loan over the past 12 months.
- 1 or more loans or lines of credit in good standing
Points to remember before getting a balance transfer personal loan
Consider the following factors before you get a personal loan:
- Determine the actual monetary gain you will receive When you receive an offer, determine the actual benefit of the balance transfer. This will help you assess whether the balance transfer is worthwhile.
- Examine all of the terms and conditions carefully Take your time going through all of the details and terms of the new lender’s package. Review the fine print to make sure you know what you’re getting into.
- Consider the following costs You may be compelled to pay processing fees and foreclosure fees with the previous lender. It is advisable to learn about these fees. Do this before proceeding with the balance transfer to determine whether or not the transfer is beneficial.
- Learn about the extra perks that are available To entice you, the new lender may make many offers. Examine these offers attentively to see whether they truly meet your needs. Then proceed with the balance transfer. Many times, we will buy a product based on its supplementary offerings and then not use any of them. To avoid this, inquire about the terms and circumstances of the offers.
- Statement of conclusion Borrowers can profit from a balance transfer service by lowering their total interest expense and saving money in the long run. The process of transferring a personal loan amount may be completed soon, with minimal paperwork. Borrowers would find it simpler to pay back the loan sooner as the burden of the interest rate decreased. Their income level also improved over time. A personal loan balance transfer may be profitable if it is carried out after a thorough check and evaluation of the balance transfer offer.
Personal loans are simple to obtain unless your lender begins charging extra interest rates. When this happens, you may want to explore a personal loan balance transfer and switching to a new lender. You may benefit from selecting the most favourable interest rates and terms. With the help of a personal loan balance transfer, you could always get better interest rates and services. To maintain a good credit history, make timely payments on personal loans.Read more Piramal Finance blogs to gain more information!