A personal loan is the most popular, simple and instant way of raising funds for you at the time of emergency or financial crunch. Although you can solve your money problem by availing a personal loan, it sometimes becomes a burden, especially when you find it difficult to pay monthly EMI on time. A personal loan balance transfer is the answer to your problem.
What Is A Personal Loan Balance Transfer?
It is a facility which your bank or NBFC is offering you of transferring the outstanding principal amount of your loan to another lender offering a better deal. It is a process which allows you to share your loan from your existing lender to a new one.
Why Opt For A Personal Loan Balance Transfer?
A personal loan balance transfer is an excellent way of consolidating your debts. Apart from
these, a personal loan balance transfer is advisable if:
● The new lender is offering better deals.
● You have a hike in your income and can pay higher EMIs to repay your loan quickly.
● Your improved credit score makes you eligible for a top-up on the personal loan.
● You want to add a co-applicant or wish to remove an applicant from the joint application.
● You want to increase the loan tenure and want to have a lower EMI.
How Personal Loan Transfer Reduces Your Monthly EMI?
A reduction in the monthly EMI is always welcome. You can achieve this by personal loan
balance transfer, also called refinancing your loan, due to these reasons:
● Increased Or Reduced Loan Tenure
The new lender may offer you increased loan tenure, depending upon your loan transfer
amount and repayment ability. It can very effectively reduce the EMI amount and can help your monthly budget positively. On the other hand, if your loan repayment ability has improved and you opt for a reduction in the loan tenure, you can finish-off with your monthly EMI liability in lesser time.
● Lower Rate Of Interest
Transferring your existing personal loan balance to a new lender which offers a lower rate of interest on the latest personal loan is an ideal way of reducing your monthly EMI. Bur before you opt for this or select a new lender, it is advisable to study the loan deal offer of the original lender carefully. Personal loan EMI calculator available on the online portal of various lenders and can you to compare their offers.
● Improvement In Your Credit Score
Balance transfer means the paying off of the existing loan before time which is going to
improve your credit score by several points. This improvement can fetch you a better deal from the new lender in terms of reduced interest rate, which will ultimately reduce your monthly EMI.
● Loan top-up
Top up of the personal loan amount is another benefit that you may get by a personal loan
balance transfer. Suppose your credit score is healthy and you are fulfilling all the eligibility
criteria for a top-up. In that case, the new lender will be happy to offer you more loan amounts, which can be handy in case of a financial crisis.
Financial experts consider personal loan balance transfer as a wise move and beneficial in the long run because it can improve your CIBIL score as well as your financial status. You can also get the benefit of changing banking policies and favorable terms of the varieties of lenders in the market. Although you have to pay the processing charges to the new lender for the loan, it is not significant when compared to the benefits of the loan transfer.