A personal loan is a quick, collateral-free option during financial emergencies, offering easy access without extensive paperwork. However, high interest rates can make repayment challenging.
What is Balance Transfer?
Balance transfer allows you to shift your current loan from one bank to another.
This method is chosen to alleviate the burden of high interest rates, especially if you have a good credit score that qualifies you for lower rates elsewhere. Lower interest rates lead to reduced EMIs.
Additional Benefits
Lower Interest Rates: The primary advantage is securing a loan with lower interest rates than your current loan, easing your EMI burden.
Loan Restructuring: Balance transfer provides an opportunity to restructure your loan. You can opt for a longer tenure, which lowers your EMI, albeit increasing total interest paid over time.
Top-up Loan Facility: Many banks offer a top-up loan when you transfer your existing personal loan. This allows you to borrow additional funds on top of your current loan.
Fees Involved
When opting for balance transfer, consider costs like foreclosure fees and loan transfer charges to your current bank.
Additionally, stamp duty, loan processing fees, and other charges may apply at the new bank, similar to those incurred when applying for a new personal loan.
