Easy credit availability is the lifeline of trade and commerce, and retail loans help drive consumption which in turn provides a boost to the economy. Thankfully, our robust financial system makes it easy for retail customers to get a personal loan in India.
Today, with the use of technology, you can apply for a personal loan online with a few clicks, get it approved in a few minutes and received the loan amount in your bank within a few hours.
Whether it’s a holiday trip, wedding, renovation, buying appliances or to meet medical emergencies, a personal loan in India can be utilized to meet many financial needs. However, once you have availed a personal loan, you may realise that you haven’t got the best deal from your lender or the EMIs are putting a strain on your finances. That is when you can take advantage of a personal loan balance transfer.
What is personal loan balance transfer?
Personal loan balance transfer is the process of transferring or moving your personal loan from one financial institution to another. Basically, it includes balance transfer of loan amount to another lender to take advantage of lower personal interest rates, extended tenure, and better terms, features and services.
If you are weighed down by big EMIs and your lender has not given you the benefit of continuous RBI rate cuts, apply for a personal loan balance transfer. With a personal loan balance transfer, you can enjoy lower EMIs with competitive interest rates and extended durations.
Benefits of personal loan balance transfer
Lower interest rates
In 2019, the Reserve Bank of India made five consecutive interest rate cuts making personal loans cheaper than ever before. However, if you had taken a personal loan before these rate cuts, you are probably still paying the older, higher interest rates.
Even a nominal reduction in interest rates can have a substantial impact on your EMI amount. Therefore, a balance transfer loan for your personal loan to a new lender can save you a lot of money.
When you apply for personal loan transfer, the new personal loan provider will also allow you to extend the duration of your loan, thus helping you to lower your EMIs even further.
Assume that you have a personal loan outstanding amount of Rs. 2.5 lakh with your current loan provider and you have a year left to repay the loan. The minimum duration, higher interest rates and higher outstanding amount are really putting a burden on your finances because you are paying more than Rs. 20,000 per month. In such a situation, the best solution is to opt for a personal loan balance transfer with a new loan provider. The new lender will allow you to extend the tenure up to 5 years for the same loan amount and lower your EMI outflow considerably.
Lower processing fees
Some financial institutions have minimal processing charges for personal loan transfers. Look for lenders that offer lower processing fees since you are paying this charge twice for the same loan. Once when you took the loan with the current lender and for the second time when you carried out the balance transfer of loan with the new lender.
When you apply for a personal loan balance transfer, generally you don’t have to worry too much about documentation since the personal loan has already been sanctioned by the previous lender. However, that may also depend upon your new lender.
With a Bajaj Finserv personal loan transfer on Finserv MARKETS, you can apply for the balance transfer with minimum documentation.
Personal loan top-ups
When you transfer your personal loan, you also get the opportunity to take a top-up loan with your new lender to meet your financial requirements. Hence, you can derive the dual benefits of balance transfer here. Firstly, you are able to reduce your EMIs and secondly, you are able to meet your financial needs. But it’s wise not to go for a top-up unless it’s unavoidable since the prime motive of a personal loan balance transfer is to lower the pressure of debt on your finances.
Remember that a personal loan balance transfer is similar to applying for a personal loan. Your new lender will sanction a new personal loan and you can choose the tenure according to your convenience. Since you search for a good bargain when you apply for a personal loan, do the same when you go for a personal loan balance transfer.
Check if the personal loan interest rates are competitive enough because reducing the interest rate and eventually your EMIs are the main purposes of this entire exercise. Also check for processing fees, foreclosure charges, convenience fees and annual maintenance charges before you sign on the dotted line.