The concept of a balance transfer was first introduced with credit cards to transfer high-interest debt from one or more cards to another card with lower interest rates, in order to save on interest as well as pay off debt faster.
The balance transfer facility is available for loans as well. Most banks and financial institutions allow you to avail the option of balance transfer on different kinds of loan, including a personal loan. Through this facility, you can transfer the outstanding principal amount of your personal loan from your current financial services provider to another institution that is offering you more attractive rates of interest. You do not need to provide any security or collateral for accessing personal loan balance transfer facility.
What are the benefits of doing a balance transfer on your personal loan?
If you are unhappy with the services of your current financial services provider, or you think you can get access to better terms on your personal loan, you can consider transferring to another lender. Here are some of the benefits of personal loan balance transfer facility:
1.Lower interest rates
The most significant benefit of a personal loan balance transfer, and the primary reason that you would choose to avail this facility, is more attractive interest rates than your current lender is offering you. A lower interest rate means you can reduce your monthly EMIs, pay off your loan faster, and thereby reduce your overall debt burden.
2.Ability to renegotiate your loan tenure
You can also choose to negotiate the tenure of your loan with your new provider. You may extend the term of your loan, which would reduce your monthly EMI burden but increase your interest burden. You can also cut the tenure short and decrease your overall interest burden.
3.Access to top-up loan facility
If you’re in need of more credit, you new lender may be able to provide you with an additional or top-up loan with attractive rates of interest if you are transferring an existing loan to them.
3.Access to better terms
If you have a strong credit profile, you may also be able to get additional features and benefits from your new lender, such as a waiver on your last EMI or zero processing fee.
Are you eligible for a personal loan balance transfer?
Just as you need to meet certain eligibility requirements to avail a personal loan from your financial services provider, you need to meet assessment criteria for a balance transfer as well. Your application will be assessed based on your credit risk and credit health. Here are some common eligibility criteria that’s applicable to most providers:
The outstanding loan amount has to be at least Rs 50,000 to do a balance transfer
A clean record of EMI payments for at least the last 12 months
CIBIL score as required by the bank, usually 700 or above
What do you need to keep in mind when you are considering a personal loan bank transfer?
You should carefully evaluate your balance transfer decision on various parameters. Here’s a few things you should consider:
Compare the various choices you have on offer and identify which option is offering you the best terms and the lowest rates. Since lowering the interest burden is likely to be your primary motivation, it is important that you evaluate the rates that different lenders can offer you.
Do your calculations on the terms that your new lender is offering you. You can use a free online personal loan balance transfer calculator to figure out the exact interest payable and compare how much you’re going to be saving in comparison to your existing loan terms.
Keep in mind the costs you may incur in transferring your loan balance and if you are comfortable with them. Your existing lender may levy a charge for the foreclosure of your personal loan, and your new lender is likely to charge a processing fee as well. Keep a lookout for any hidden charges. Take these costs into consideration when you’re evaluating an offer from a new lender.
If you’re unhappy with your current lender, keep a look-out for other providers who can offer you better terms and offer the balance transfer facility. The Bajaj Finserv personal loan can offer you attractive rates of interest if you’re looking to take out a fresh loan. Offered on Finserv MARKETS, the Bajaj Finserv Personal Loan can be customized to meet your unique requirements. You can avail a collateral free-loan for up to Rs 25 lakh with instant approval and disbursal. You can also use the personal loan EMI calculator, available for free on the Finserv MARKETS website, to check exactly how much interest you have to pay based on your loan amount and tenure.
Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!