What is Personal loan balance transfer?
Personal loan balance transfer facility is the same as any other balance transfer facility, which lets you, to transfer your outstanding personal loan amount from one bank to another bank. Once you opt for this Personal loan balance transfer facility, you will be required to pay the loan EMIs to the bank which you opted to transfer your loan into. This means the applicable rates and charges of the new bank or money lender would come into force.
Why should I opt for personal loan balance transfer?
Some of the many reasons that might be considered to take a personal loan balance transfer:
- Better interest rates with services: You might have taken the existing personal loan with a higher interest rate depending on your salary or income, but once you start climbing up your professional ladder by improving your income track record, banks might be willing to offer lower interest rates on personal loan compared to your existing rates. You can also hope for better services if you are unhappy with the services offered by your current money lender.
- Avail additional loan amount: Personal loan balance transfer gives you the option of increasing or adding the loan amount while changing the bank.
Can I transfer my personal loan from one bank to another?
Yes, you can transfer your personal loan from one bank to another, but not similar as balance gets transferred on your credit card. You can take a loan with lower interest rate from the second bank by repaying the loan of the first bank.
What key factors should I consider while availing a personal loan balance transfer?
Please ensure to follow some important factors before you opt for a personal loan balance transfer like calculating how much you will end up paying in total to the new bank. Some banks may be offering you a lower EMI, be careful to check whether that is coming at the cost of a longer duration, as you opt for a longer loan duration, the overall interest outflow would also increase. Please access and compare the old option with the new one by using online balance transfer calculator.
Processing fee and other charges:
A personal loan balance transfer usually comes with a pre closure penalty, with a fee ranging between 1% to 3% of the principal loan amount being transferred and should be payable to the new lender or old one depending subjected to the individual bank policies. Keep in mind as this fee is charged because the original loan is being cleared before the loan tenure completion.
Terms and Conditions:
Remember to read and understand all the key documents of your personal loan balance transfer agreement carefully before opting for the loan transfer facility. Ensure that you are aware of the key terms and conditions; do not miss out on any of the hidden charges which would increase your overall personal loan amount.
Be careful Banks may offer additional benefits like free credit cards or accident insurance to prompt you for availing loan transfer facility, try to analyze such offers very carefully and the terms and conditions before taking any decision.
It is highly advisable to consider all the factors mentioned above before opting for a personal loan balance transfer. Assess the long-term benefits of the balance transfer and make sure that you don’t do it for an offer that is slightly better than your existing bank.