Learn How Balance Transfer in Personal Loan Can Help You Reduce EMIs
A personal loan is an excellent option to meet short-term financial emergencies. Borrowers seek personal loans to take care of their immediate expenses like funding a wedding, education, business, home improvement project, debt consolidation and travel over-looking the rate of interest.
Quick disbursal of the loan amount and minimal documentation makes it even more attractive. However, being unsecured, personal loans often incur a high-interest rate. A borrower may take the loan during the need of the hour, but it slowly burdens them when they have to pay hefty EMIs. A personal loan balance transfer is a suitable option to lower this burden.
Personal loan interest rates are usually higher in comparison to other loan products. People not only take this loan to meet their monetary needs but sometimes to enhance their credibility also. A small loan amount borrowed for a short duration of time and repaid timely helps to improve the credit score. A healthy credit score opens the doors for future debts and loan offers. However, even a minor default in the repayment of the EMIs can hamper your credit score badly. Thus, it is advisable to opt for an EMI that you can comfortably afford. Online portals of banks offer services like EMI Calculator which calculates the loan EMI based on the income.
Larger EMIs can be burdensome in the long run and may also disturb your monthly expenses in a limited income. To make the EMIs easy on the pockets, one can opt for a Personal loan balance transfer by switching from your current lender offering a high rate of interest to another lender offering a better rate of interest and terms. Lower interest rates eventually lead to lower EMIs.
WHAT IS A PERSONAL LOAN BALANCE TRANSFER?
A Personal loan balance transferis the process of transferring your loan from your current lender to another lender. The main aim of the balance transfer is to lower the interest rate and the overall cost of the loan. Herein, the new lender pays the outstanding loan amount of the borrower with their current lender and initiates a new loan with the borrower. As the rate of interest goes down, the EMI also reduces.
To get a lower interest rate, the borrower must have a good credit history. A healthy credit score reflects timely repayments of your previous debts. It assures the lender of minimum risk and hence it readily offers better terms and rates. A balance transfer with a lower rate of interest and longer tenure helps to reduce your EMI considerably. It means you can have some spare money every month.
ADVANTAGES OF PERSONAL LOAN BALANCE TRANSFER
A Personal loan balance transfer comes with its share of advantages, like:
- The competition in the lending sector is in the stride of the borrowers who get competitive interest rates on personal loans. The borrower can opt to transfer the loan in the middle of the continuing loan. As one opts for the transfer to a lower interest rate, the EMI goes down.
- The current lender may not want you to opt for a balance transfer. It gives you a better chance to negotiate a lower interest rate with them on the continuing loan. Based upon your credibility, the lender can offer you a new lower rate of interest.
- Opting for a balance transfer not only gives you a lower interest rate deal but also better loan terms and services.
Balance transfer also opens doors for a top-up loan.
THINGS TO REMEMBER
The main reason a borrower opts for a balance transfer is to lower the cost of their ongoing expensive loan. But, it is crucial to do the calculations properly so that you don’t end up paying more in the end. Do consider the foreclosure charges and process charges levied by the current bank and new bank respectively. Negotiate on these aspects to make the transfer more profitable.
It is advisable to compare different lenders before finalizing the one. Fintechs, like LoansJagat, offer a comparative platform wherein you can compare over 40 lenders for their eligibility criteria, rate of interest, and processing fees and also calculate the EMI using the online EMI Calculator. Apply for a Personal loan in Delhi or any city from the comfort of your home through their online platform and grab the most affordable personal loan plan.