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Factors to consider while planning a Personal Loan balance transfer
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A balance transfer is a facility available with a personal loan. As the name suggests, the concept involves the transfer of an outstanding principal amount from one financial bank to another. Typically, a balance transfer is carried out to attain better terms on the loan and it aids in easing the burden of the debt. This facility of transfer was first available with credit cards but is now also extended to personal loans.
Personal loan balance transfer is a great facility and can be used to obtain lower interest rates on the outstanding amount. However, it is essential to evaluate the offer thoroughly before opting for one. Here are some of the important factors that you must evaluate:
Offered rate of interest – The most imperative or beneficial aspect that you must note when considering a personal loan balance transfer is the interest rate. Ensure that it is lower than the rate of interest that you pay currently. A lower rate of interest will bring down your monthly EMI cost and aid in paying your loan faster. Thus, you can ease out your debt burden quickly.
Terms and conditions – Consider the terms and conditions that are being offered with your new lender. In the case that you have a strong credit profile, you can negotiate to enjoy better terms and conditions with your transfer. Look for better terms such as a waiver on your last EMI and lower processing costs.
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Option to negotiate the loan tenure – The ability to choose your loan tenure can be an extremely effective factor when managing your online personal loan. Your new provider must let you choose a tenure that fits your current financial standing. Being able to extend your loan term can be extremely useful in reducing your EMI. However, it can also lead to increase in the interest rate on your loan.
Transfer cost – There may be some costs associated with getting a personal loan balance transfer. Ensure that you know of the charges and keep an eye out for any hidden costs. You must closely consider these fees when evaluating the balance transfer offer from a lender.
As with having to meet the eligibility criteria for availing a personal loan, the bank assesses your profile when offering a balance transfer. Factors such as your credit report history, total balance amount to be fulfilled and the EMI payment record are closely evaluated. Thus, you should be aware of this aspect before considering a personal loan balance transfer.
Additional read: How to effectively plan your monthly budget with loan EMIs
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