It is known that personal loans are among the costliest types of debts. It charges a higher rate of interest because it is unsecured. And it is why borrowers with a higher credit score, repayment and employment history are awarded the loan approval.
Sometimes, many borrowers with an ongoing personal loan opt for the loan balance transfer. It is to reduce the repayment cost of the active loan account.
It is known as transferring the debt from one lender to one offering lower personal loan interest rates. This way, the borrower manages to repay smaller EMIs than earlier and save big.
If you also want to make your existing personal loan affordable, then you can go for the personal loan balance transfer.
However, before you do that, you need to consider a few golden rules to approach it smoothly and with confidence. Read on and know more!
Is there collateral being asked by your new lender?
If you have repaid a bigger portion of the loan and is now going for the transfer, then you should ensure that you don’t pledge any collateral by your new lender.
Ensure going through the fine prints of the loan
The next thing you need to ensure while going for the personal loan offer for transfer is checking the terms and conditions of the new lender. This way, you will be aware of what to pay and at what juncture during the loan journey.
Be aware of the processing and technical charges
Before you go for the personal loan balance transfer, the first thing to consider is multiple charges of your loan. They are processing and valuation charges, legal and any more charges and more. You should add the entire cost along with the principal, the new personal loan interest rate and then compare with your current offer. This way, you will come to know if the upcoming personal loan balance transfer will reduce your EMIs or not. If not, then it is not worth considering opting for the loan balance transfer. To evaluate your exact fees for it, you can use the personal loan calculator like the personal loan balance transfer calculator. This tool is available on a lender’s website free of cost.
Check if your lender is offering you the top up loan
When you go for the personal loan balance transfer facility, many renowned lenders offer you the top up loan. The top up loan is a loan amount that may be above or equivalent to the outstanding amount. The rate of interest charged on the top up loan is almost similar to your ongoing loan. You can repay the loan just under your active personal loan debt tenure. The benefit of the top up loan is that you can use the money for any extra needs that you may have. You don’t need to make any fresh applications for it. You are already pre-approved for it. All that you have to do is – ask your new lender about it.
If you are dealing with a higher loan EMI that is consuming a significant portion of your income, then the personal loan balance transfer is surely a smart option.
This way, you can reduce your costs and pay lower EMIs. If you are able to save more than your current loan, then the loan balance transfer is worth giving a shot.