Save on EMI by opting for a personal loan balance transfer

A balance transfer with respect to personal loans is the means of transferring an outstanding loan amount from an existing personal loan account to a new account with a separate lender. People usually avail of personal or personal loan balance transfers for better offerings which typically include favorable features and lower interest rates. The scene tends to be advantageous for those who either pay more through their personal loan EMIs or for those who have a short tenure to pay off their loans within. Keep in mind though, that before availing of this feature, one must carefully evaluate both the balance transfer offers and the total cost that is involved in them.

Why consider a personal loan balance transfer?

With multiple pre-approved personal loans, the transfer of balance ensures that borrowers do not become victims to paying off expensive EMIs. Ongoing loans can be transferred to other lenders at lower rates of interest. However, a borrower will also be free to choose a personal loan balance transfer if she or he is dissatisfied with their current lender’s services in general. Ensure that before you choose this option, you should evaluate the total cost of transferring a loan, including the gross savings you will have and any pressing terms and conditions. Some of the key features of opting for a personal loan balance transfer are:

  1. Lowered Rate of Interest

The most attractive feature that you can avail of with a personal loan balance transfer is that you can shift your personal loan to having a lower rate of interest. A lower interest rate signifies that you have greater savings which can allow you to focus on all of your other financial goals.

  1. Change Your Loan Tenure

A balance transfer of your personal loans affords you the benefit of altering your tenure as well. Having to deal with a longer tenure means fewer EMI while you have to pay higher EMIs with a shorter tenure. A short tenure will also end your personal loan faster and therefore allow you to save on interest. For this reason, when you opt for a personal loan balance transfer, you can choose the tenure option that best serves you.

  1. Avail Top up facility

When you choose a personal loan balance transfer, you get access to a top-up loan facility. Let us try to understand this better using an example. Suppose you transfer an outstanding amount of Rs. 4 Lakhs to a new lender. Let’s assume you need Rs. 2 Lakhs more to fulfill your requirements. In this case, your total loan amount will grow to become Rs. 6 Lakhs, and EMIs will be charged to you accordingly.

  1. Can avail better terms on the loan

When opting for a personal loan balance transfer, you have the opportunity to choose the lender with whom you can avail of the same loan on better terms. When it comes to things like tenure, pre-closure, payment, or processing fee, ensure you carefully choose a lender best suited to you.

The Bottom Line

A personal loan balance transfer is a useful way to avail of the same pre-approved personal loan at a better interest rate, tenure, and general terms and conditions. Ensure that you, as a borrower, have a clean record of consistent EMI payments with your ongoing loan. Usually, a CIBIL score of 700 and above is necessitated for a balance transfer.

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