5 Things to Know Before Transferring Your Personal Loan Balance
Obtaining a personal loan in India has various benefits for personal as well as business purposes. The most talked-about advantages of personal loans are – they are disbursed quickly, you don't even need collateral for obtaining them, they need lesser paperwork and documentation, and the personal loan amount can be used for any financial need of yours.
However, the major disadvantage of these loans is – being an unsecured loan, they are more expensive (in terms of the interest rate) than other forms of loans such as home loans, loans against property, or another financing in India. Thus, you should consider taking a personal loan only after weighing all the pros and cons associated with them.
If you have an existing personal loan which is quite expensive to repay, you have an option of transferring it from one bank to another, to avail a lower interest rate and better terms.
However, before you decide to go for a personal loan balance transfer, it's important to understand these five factors:
1. What is the Process of Personal Loan Balance Transfer?
For a personal loan balance transfer, ask the second bank (where you're going to transfer your loan account) to issue your outstanding payment on existing personal loan account to the issuer bank.
Once you've paid this money, the transfer of your personal loan balance is done with another bank, now you've to pay the balance unpaid amount to the second bank. Many banks even allow personal loan transfer online.
2. What Will be the Total Repayment Amount?
When transferring the personal loan, you need to consider total repayment amount you will be making over the loan. Although you would have considered low-interest rate and reduced EMIs before making the transfer decision, you might still be repaying a larger amount if your loan tenure is longer with the new bank.
3. What Processing Charges Are Involved?
Make sure you check what is the stamp duty, processing fee, technical/ legal fee, loan valuation fee, etc. you need to pay for the new loan agreement before making the final move. Calculate all these charges to analyse if it is more than or lower to the interest rates that you are going to pay on transferring the loan. If the charges are more than the benefits of transfer, don't consider the option of loan transfer.
4. What is the New Interest Rate?
The most important reason why people consider loan transfer is the lower interest rate. Before finalising the new lender, it's important to find out how much difference you are getting in the interest rate. You can apply for loan transfer online for better options and easy comparison.
5. Are There Any Other Benefits?
In addition to lower interest rates, some lenders also offer other benefits such as a free insurance or credit card. Don't forget to look out for such offers before making the final jump.
Personal loan balance transfer can be beneficial if chosen wisely. Before taking the leap, it is important to study the banks' terms and conditions for the loan transfer to make the most of this available option.