Are you facing a difficult time managing your monthly finances? Are those EMIs on personal loans causing trouble for you? Well, you can explore various options, one being a personal loan balance transfer, to deal with it.
With a personal loan transfer, you can switch your existing personal loan outstanding to another lender at a lower interest rate to reduce your EMI burden and overall loan cost.
Know all about personal loan transfer from one bank to another
What is a personal loan balance transfer?
A personal loan balance transfer allows you to transfer your existing debts on current personal loan to another personal loan lender at a lower rate of interest. Note that, sometimes, based upon your credit history, you can even avail a higher loan proceeds on a personal loan transfer.
Given that the balance transfer option allows you to enjoy a lower personal loan interest rate and reduces your financial burden, does it sound like a good plan? There are, however, a few questions that you must ask yourself before availing the transfer option to zero on the right deal.
Is it a prudent deal?
Before you sign up for a personal loan balance transfer, it is recommended to assess your overall loan cost. After cost benefit evaluation, if you find a higher overall amount is going towards balance transfer, then there is zero point in opting for the transfer option.
When assessing the offer, you even require deciding on the loan repayment tenure. While it entirely depends on your financial condition, you must try to repay a higher personal loan EMI over a shorter span. In case it is not feasible, go for a higher repayment tenure to repay lower personal loan EMIs.
Have you read everything carefully?
Many tend to be lazy when it is about reading the terms and conditions of the loan. However, if you avoid any minute detail of the loan document, you may miss out on a few crucial details. Thus, it is recommended to read all the loan linked documents thoroughly before you agree upon the conditions.
Is there any kind of string attached to the loan?
By strings, it means processing charges and other fees associated with the balance transfer loan. No matter what, you should have a clear understanding of all such fees from the beginning. As it is a balance transfer option, you will be required to pay a prepayment fee to the existing lender. However, such conditions may differ from one bank lender to another lender.
You may be required to pay a charge in the range of 1 and 3 percent of the principal constituent that is being transferred. Based on the loan proceeds, such fees could add up, which is the reason why you must have thorough clarity on the fees involved.
While it is not considered incorrect to accept a transfer offer, you just require being sure about what you want according to your suitability. Most importantly, you must decide if it is completely necessary to choose a transfer option. Lower interest rates may attract you to opt for the transfer option, but do not forget to compute your overall loan cost as additional fees may at times increase your loan cost. Thus, whether it is personal loan online or offline transfer, opt for it only after you have considered the charges.
While balance transfer might considerably lower your EMI burden, missing out on your payment deadlines may defeat your purpose of availing a transfer option. This may ultimately lower your credit score. Thus, besides enjoying the benefits of the transfer option, it is important for you repay your outstanding dues in full by the due date.