As a rational person you always choose the benefit of low price, just like a rational customer always finds ways to reduce the cost of the loan taken. Balance transfer is one of the many ways to reduce loan costs. It is easy and definitely beneficial for your credit history and credit score.
Personal loan balance transfer
Transfer of personal loan is an easy concept. But in this case you will get a personal loan from the bank at a fixed interest rate. After paying some EMI, you can transfer the remaining loan amount to a bank of your choice, which has lower interest rates. There are no problems in loan balance transfer in case of repayment or any other situation. The instalment will remain in its place. The thing that will change will be the money to be paid. Now when you are getting such a personal loan, in which you will have to pay less interest, the instalments will also change. This will depend on the term rules of the bank and the payment system of the loan.
Is personal loan balance transfer beneficial?
This is a very important point here. Whether personal loan is beneficial or not is a subjective question in itself. Lone is not a snack that when you are hungry, you take it. It is like a staple food, which is taken only when you need it. If you are taking a personal loan, then it comes with some benefits.
The first thing you get in transfer of a loan is a low interest rate and a long loan term. It can be bad for someone and good for someone. This is usually good for customers. When you get low interest rates, it is not difficult to extend the period for a long time.
On the other hand, if you pay EMI for a long time then your credit score automatically increases. But keep in mind that EMI has to be paid continuously. In fact, now it will be easy for the customer to pay EMI regularly as the loan rate is much lower than before.
How to reduce interest rates?
As mentioned in the article above, you do loan transfer from one bank to another to get lower interest rates but it is not as easy as you are thinking. Basically it does not matter what the borrower is willing to do here. All customers want to cut interest rates only. But even if they want, they cannot switch to a lower interest rate. It will depend on the other bank whether it will pay you less interest or not.
Transfer your personal loan to get a lower rate of interest
You took a personal loan from XYZ Bank. If you are also paying EMI regularly. Due to this your credit score is also increasing continuously. Other banks will also get into action because they want committed customers like you too. In this case, they will give you a loan at low interest rates. To save some money every month, you can switch to another bank in this case.
Keep these things in mind before transferring a personal loan
When you have taken a loan for the first time, you will have also paid the processing fee. When you switch, the new bank will also have to pay processing fees. Calculate this fee whether switching is beneficial or not.
Security Value and Guarantee
Usually, customers keep their old guarantee kept in the previous bank as security also in the new bank. This is common but there is a setback here. If you have already paid off a large part of your loan, then giving a security, which is worth more than the unpaid portion, is not a wise decision.
Total Cash Outflow
You were attracted to low interest rates but did you think that your loan period was also increased during this time. Therefore it is important to calculate how much money you are paying to the lender. Total cash outflow should not be more than what you have to pay.
Before signing the loan agreement, read the terms and conditions written in it carefully, especially about hidden charges.