Personal loans are a practical way to manage financial constraints. But people availing of loans can sometimes find it challenging to pay the EMIs. This situation can occasionally be due to a high-interest rate, leading to higher EMIs. One way of dealing efficiently in such circumstances is by opting for a balance transfer loan.
Even with the existence of such a mechanism, most individuals are still oblivious to its benefits. If you are looking for more details about personal loan transfer, stay tuned as we explore its various facts.
In its very essence, a loan transfer is a process of shifting from one loan provider to another. This happens when borrowers move their outstanding loan balance to another lender offering a lower interest rate. A borrower may do this to reduce their current cost of borrowing and switch to a lower interest rate.
The new lender now settles the old loan balance for the borrower while providing a new loan with a lower interest rate. Owing to this lower rate, borrowers can save significantly more on their EMI payments.
If your loan was on a fixed interest rate basis, the lender might charge you a foreclosure fee of up to 5% of the existing loan amount. But if your current loan is on a floating rate basis, no additional foreclosure charges would be applicable.
Further, the new lender can charge you a loan processing fee of INR 500 or up to 4% of your existing loan balance. In every case, you must clarify the applicable charges before zeroing in on a lender.
As someone paying a high EMI rate, opting for a personal loan balance transfer can benefit you in the following ways:
With several benefits, a personal loan transfer can help augment your cash flow and manage EMIs more effectively. Let's now look at a few factors you must remember before opting for a transfer.
A few aspects that can help you decide on a loan transfer are:
Select a tenure that best meets your objectives. Also, if there are a few months left before your current loan's closure, a loan transfer may not be the best idea.
While considering a loan amount, verify the charges and interest rates applicable across different vendors for different amounts.
Ensure you verify the processing charges and foreclosure fees across multiple lenders to arrive at the best deal.
A balance transfer loan provides a practical way to manage your EMI payments while enhancing your credit score. But before you opt for one, you must consider all aspects, such as the lender, tenure, charges, etc., to find the best fit.
Get instant loans directly to your Savings Account through the Fi Money app. With Fi's paperless process, users can benefit from competitive interest rates and complete control over all loan details. Further, automatic in-app payments can also help avoid late EMI fees.
The charges for loan takeover can differ between vendors and also on your present loan's characteristics.
A loan transfer can help you manage your finances if carefully planned
