Things to Keep in Mind While Opting for
a Personal Loan Balance Transfer
Personal loans are often availed in the hour of need. For example, a credit union auto loan, to finance a new or used car. When a financial crisis strikes, however, our resources become limited, forcing us to opt for a personal loan even if it is at a high interest rate. But once things stabilize, you wonder if the interest burden and EMIs could have been lower. Luckily, with a personal loan balance transfer, you have a solution for this. It is a mechanism that allows you to transfer an outstanding personal loan from one lender to another, lowering the burden of debt.
However, you need to be mindful of a few things before you decide on a balance transfer. These include...
- Processing fees: It is an inherent cost that the new lender may charge you during the processing of the personal loan balance transfer. If the processing fee is quite high, it will lower your overall benefit. Therefore, thorough research is a must before you decide about the transfer. You can look for zero or reduced processing fee offers by prospective lenders.
- Better service: It is not a given that every lender will satisfy you with the same after-sales service. If the existing personal loan is expensive, you may opt for a different lender. But make sure the new lender is providing better or at least equal service as the existing one.
- Top-up loans: The new lender may offer an extra loan over and above the existing loan that may help you meet your new financial needs. It could even save you from applying for a new loan. Ideally, it should have the same or lower interest rate as that of the original one.
- New EMI: The benefit that looks most lucrative during personal loan balance transfer is the reduced personal loan interest rates. It can lower your EMIs or the loan tenure, or both. However, you must check the tenure options your new lender is offering. Using a personal loan EMI calculator, you can find out the amount you can conveniently pay each month.
- Better loan terms: Better loan terms could be anything from top-up loan offers, better foreclosure charges, lower fees and charges etc. It can also include better and/or flexible repayment terms as well. It won’t benefit you if you land up with unfavorable loan terms after the balance transfer, just for the sake of lowering your personal loan interest rates.
These are some of the helpful tips for you to decide now whether it will be beneficial for you to opt for a balance transfer. Make sure you do your research and compare between different providers to choose the right option for you. Once you are certain of its wholesome benefits, you can choose to transfer the balance of your personal loan to your preferred lender.