Benefits of Personal Loan Balance Transfer

5 min read

A Personal loan balance transfer is a process that allows a customer to transfer his or her personal loan from an existing lender to a new lender.  By means of this, you can enjoy a lower rate of interest on the outstanding amount. The primary reason for transferring your balance is to reduce the burden of a personal loan. Almost all lenders offer a balance transfer facility for every type of loan – personal, education, auto etc. Hence, after the transfer of a personal loan, the applicable rates and charges will be as per the policy of a new lender. It will help you save on the interest you have to pay every month.

Better interest rates: It is one of the biggest benefits . The new lender usually lowers the interest rate on personal loan, which ultimately reduces borrower’s interest burden and thereby EMI burden. You can understand personal loan balance transfer with this example. If you take a personal loan of, say, Rs. 5 lakhs for 60 months at 12.5% interest per annum, the interest rate applicable on your personal loan for the entire tenure would be Rs. 1,74,938. After 10 installments, if you decide to transfer your personal loan from existing bank to a new lender offering lower interest rate, say 11%. Now your principal outstanding is approximately Rs. 4,36,682. On balance transfer, the interest rate you would need to pay for the outstanding loan for the entire tenure would be Rs. 1,09,655. In this case, you save almost Rs. 16,111 in the form of the interest rate. However, you should request your current lender to reduce the interest rate, and if the lender is not willing to reduce, consider a balance transfer.

Top-up loan facility: Don’t worry if you are in need of more money, many lenders offer top-up loan or additional loan options on a personal loan balance transfer at a competitive interest rate. So rather than applying for a new loan, you can apply and get a top-up on a personal loan transfer to meet your requirements.

Extended duration: While transferring your personal loan, you can negotiate the tenure of the existing personal loan as per your requirement. You get the tenure of your personal loan extended or reduced that is comfortable for you. EMIs and interest increase accordingly.

Better Services: It is a better option, if you are not satisfied with your current bank or lender. You can transfer your personal loan from existing lender to a new lender who you think can offer better after-sales services.

Personal loan balance transfer is now very easy. To stand the benefits of better services and a lower rate of interest, everyone should consider this option, at least once during their loan.

Transfer process: Transferring the outstanding balance from an existing lender to a new lender is simple and hassle-free, and needs minimal documentation. You have to contact your current lender to collect the information about outstanding principal amount, tenure completed till date, current rate of interest, and on whose name the demand draft has to be made. After that, you should approach a new lender to execute the formalities.

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