A personal loan is unsecured and provided by lenders to meet your requirements. It is offered based on key parameters like income level, employment and credit history, repayment capacity, etc. As it is unsecured, you do not require pledging any security or collateral like gold, fixed deposit, or property to avail of the loan. Thus, in the case of default, lenders cannot auction anything to meet the loan amount. Lenders compensate for the higher risk involved, i.e., the non-presence of security or collateral, by charging a higher personal loan interest rate than secured loan options.
As the personal loan interest rate is usually higher, many people, after serving their loan EMI for a few years, begin thinking about the private loan balance transfer option. With a personal loan balance transfer facility, you can easily transfer your outstanding loan amount from an existing lender to another lender that provides a lower individual loan interest rate on exceptional loan proceeds.
How does the personal loan balance transfer option function?
In the case of the personal loan transfer option, your new private loan lender repays all your outstanding dues to your existing lender. If your existing personal loan is attached to a fixed interest rate regime, you will bear a prepayment charge from your pocket. Additionally, as the personal loan refinance or transfer option is considered a new personal loan, you must also meet the processing charges. Thus, incorporate the prepayment charge on your existing loan and the processing charge on your balance transfer loan to compute your overall savings on the transfer facility. After factoring in both directions, you still save a substantial interest constituent on your outstanding loan, then opt for the transfer option.
Here are the important benefits of opting for a personal loan refinance or private loan balance transfer option
Interest rate benefit – This is one of the major advantages of the balance transfer option. Opting for a balance transfer may lower your interest burden. However, before you click on the personal loan, apply online, vote for the balance transfer, and compare amongst different lenders to zero on the best lender offering the lowest interest rate on this facility. Once you have selected your balance transfer lender, use the personal loan EMI calculator to calculate the suitable EMI, overall savings, and preferred repayment tenure.
Extended repayment tenure –
You can negotiate your repayment tenure when transferring your loan from an existing lender. You can extend your repayment tenure using your balance transfer option to reduce your EMI burden. However, raising your repayment tenure lowers your EMI burden and increases your overall interest. Thus, keep your assignment as low as possible per your cash flow and repayment capacity. Doing so would allow you to enjoy a lower overall interest outgo.
Higher features –
Based on your repayment history and existing income, you have negotiated with lenders for better deals on loans like Zero Pro, such as charges, waiver of the last personal loan EMI, and reduced interest rate. You also have the option to opt for a top-up loan facility in case you require an additional loan to meet any of your necessary needs.
Ending note
The personal loan balance transfer option benefits you from a lower interest rate at better terms and conditions. However, you must always maintain healthy credit behavior to get this facility easily. A good credit profile boosts the lenders’ confidence in you and allows them to offer you a deal at the best terms. Also, before you hit the online loan application button, compare amongst lenders by visiting an online lending marketplace to choose the best lender per your preference and suitability.
