Having a harsh time dealing with your accounts? Are those Personal Loan installments causing inconvenience? All things considered, you can’t backpedal so as to pick a better loan offer, yet you beyond any doubt can investigate different alternatives. Have you at any point considered an adjust exchange? Possibly, it’s chance you did!
Life doesn’t regularly give you another opportunity. Be that as it may, with the choice to decide on an adjust exchange, you really do get another opportunity. An opportunity to move to a lower financing cost on your on your Personal Loan from the present high rate that you’re at.
But, hold on a second! We know you’re excited about it, but you can’t just opt for a balance transfer at the drop of a hat. You need to think about a lot of other stuff.
Read on to know about the entire process and then decide whether it’s the right choice for you or not.
What Is A Balance Transfer?
A Personal Loan balance transfer works exactly like a Credit Card balance transfer. You get to avail a better rate of interest and a better loan offer by transferring your loan balance.
It could mean transferring it to another bank or switching to another loan offered by the same bank. It all depends on the availability, rules of the banks involved and, of course, your luck.
Is It A Good Idea?
Given that a balance transfer lets you enjoy better rates of interest and lowers your financial burden, it sure sounds like a great plan, doesn’t it? But, like everything else, you need to evaluate the disadvantages as well.
One of the biggest concerns is that many banks and financial institutions might try to lure you with offers that sound attractive, but in reality are not. You might be so blinded by the thought of paying a lower rate of interest (and a lower EMI) that you might not be able to see the negatives.
When Should You Opt For A Balance Transfer?
If you need to decide whether or not it’s a good idea to opt for a balance transfer, these pointers will help:
A Great Rate Of Interest
The biggest reason to opt for a balance transfer is to get a better rate of interest. It’s possible that, according to the conditions at that time (like your salary and track record), you acquired a loan at a higher interest rate.
Now, hopefully, things are different (and better) and your track record has improved too. That means you can get a better offer.
In Dire Need Of Cash
Have your finances gone a bit haywire? Can’t think of ways to get things back on track? Worry not! A balance transfer can rescue you.
While opting for it, you can request your new lender to increase the loan amount. This additional loan can come in handy in case of a financial emergency.
Lender Giving You Trouble?
No need to deal with your lender’s tantrums. If they’re giving you a lot of trouble, it’s time you make a switch. Apart from getting a better rate of interest, it’ll also relieve you from the hassle of a troublesome lender.
Now remember, unless you know everything about the offer, opting for a Personal Loan balance transfer could be a little risky. However, that doesn’t mean that you shouldn’t consider it. You just need to be a little careful about the various factors involved in the process.
Here are the main questions you need to ask:
- Is It A Good Deal?
Before signing up for something that might become a problem later, it’s better to evaluate all possible aspects.
For starters, take a pen and a piece of paper and do some math. Don’t worry! This doesn’t involve trigonometry or algebra! You just need to calculate and determine whether the existing loan is better than the new one. It’s simple. If you’re going to pay more for the new loan, there’s no point opting for a balance transfer.
While evaluating the offer, you also need to decide the loan tenure. Although it totally depends on your financial situation, you must try and pay higher EMIs over a shorter period. In case that isn’t feasible for you, opt for a longer period with lower EMIs.
- Have I Read Everything Carefully?
We all tend to be super lazy when it comes to reading the fine print. But, if you ignore the minute details on your loan documents, you might miss out on some important details.
Therefore, it’s advisable to read all loan-related documents carefully before agreeing to the terms and conditions. It shouldn’t take more than 15 minutes of your time, but it could save you a lot of hassle in the long run.
- Are There Any Strings Attached?
By strings, we mean processing fees and other charges associated with the loan. No matter what, you must have a crystal-clear idea of all these charges right from the start.
Since it’s a loan balance transfer, you will most probably be asked to pay a pre-closure penalty to the old lender. However, these conditions might vary from one lender to another.
You might be asked to pay a fee in the range of 1-3% of the principal amount being transferred. Depending on your loan amount, these charges could be quite substantial, which is why it is important to have complete clarity on any fees involved.
Different lenders or financial institutions might try to lure you with balance transfer offers. While it isn’t bad to consider or even accept one of these, you just need to be sure of what you want and what will suit you the best.
Most importantly, you need to decide if you absolutely need to opt for a balance transfer or not. Lower rates of interest might lure you into opting for a balance transfer, but don’t forget that there may be charges involved. After taking these charges into consideration, you might change your mind.