When availing a personal loan to meet your financial mismatches, you may try your level best to avail the lowest possible personal loan interest rate with minimal processing fees. However, often you forget to review the chances of further savings once you start with your loan repayments. Opting for a personal loan balance transfer is one of the ways through which you can do so.
A personal loan transfer is an approach which allows you to transfer your existing personal loan to another lender at a lower interest rate. This route is a prudent way to save substantial interest costs.
Checkout scenarios when personal loan transfer from one bank to another can be beneficial:
- When difference in interest rate is substantial
Personal loan interest rates differ widely across lenders. Thus, it makes complete sense if you keep comparing the rates. Moreover, if the personal loan rate is falling continuously after you avail the loan, you must ensure to compare amongst the latest rates. In case others are providing a considerably lower interest rate than what you are repaying, you might consider opting for the transfer option. A personal loan is a mid-term credit option with a maximum repayment tenure of 5-6 years. Even a 1 percent difference in rate might mean remarkable savings.
- When your loan is in the initial phase
If your personal loan is in the starting phase, a considerable part of your loan EMI goes towards interest. For example, if you have availed a personal loan at a rate of 14 percent p.a. for a repayment tenure of four years, you may require paying over 72 percent of your overall interest dues during the starting two years of your tenure. It means if you opt for the transfer option in the later stage of the repayment tenure, the net benefit might not be considerable. However, in the initial half of the repayment tenure, opting for the transfer option can provide substantial savings.
- When you want flexibility like repayment tenure change, and top up
Depending upon the changes in your monthly expenses and income, if you want to change your personal loan tenure, either by decreasing or increasing it, you might opt for the balance transfer option to get a repayment tenure of your preference beside the possibility of availing reduced personal loan interest rate.
In case you are looking to avail additional funds, a transfer option might also allow you to avail a top up personal loan at a lower rate from the new lender.
A personal loan balance transfer is an excellent route where the outstanding loan amount of your ongoing personal loan is switched with another lender offering better conditions at lower rates. This facility assists you to reduce your debt burden. Moreover, it also permits you to get higher funds in the form of a top up loan to meet your monetary crunch.