While you are paying of your personal loan with high interest rates, somebody else is paying off their loan with much less interest rates. Now wouldn’t it be just great if your bank suddenly drops the interest rate too? Well, that is not going to happen, but what you can do is, go for personal loan balance transfer. You probably would have seen this type of schemes from various banks like Axis balance transfer and HDFC balance transfer, with offering much less interest rates as compared to your bank. There are various factors to keep in mind, because it is not as simple as it seems.
What exactly does Personal Loan Balance Transfer means?
Personal loan transfer translates to simple balance transfer like any other balance transfer facility out there and balance transfer simply means transfer any kind of debt amount from one bank to another. After the paperwork is done, you would pay credit card amount and loan EMIs to the other bank and the rate of interest and other charges will be paid according to new bank’s policy.
Factors to consider if you are planning to apply for a personal loan balance transfer.
Take note of that processing fees–
Most of the banks a pre-closer penalty, which is equals to 1 to 3% of the principal amount which is due to the new bank or the amount which is being transferred. This fee is mainly charged because the entire loan amount is payed off by your current bank before the tenure period. So, factor in this cost before taking the decision of balance transfer.
Factor in all the aspects of the deal– You cannot just think of the small term benefits, you have to also look at the long term cost which you will paying and then decide is it worth it to switch to a new lender or not. The introductory offers will definitely be more attractive like lower EMIs and 0% transfer fee, etc.
Take a look at that small print– A bank’s policy have all the small details including miscellaneous charges, as it is demanded by the law. So, before agreeing to the terms and condition, duly read the fine print and then agree.
Analyze other benefits too– Many banks are really aggressive towards providing these offers as they want to expand their consumer base, so in order to make that happen they offer other additional benefits, like free credit cards or accidental insurance for your personal benefit. Analyze these schemes too, before making any kind of decision.
In conclusion, it is essential for you to consider all the pointers mentioned above and may be even take someone’s advice who is good with loans and numbers.