Personal loans often come at a very high-interest rate, between 15 to 20%. This is where balance transfer can be a good idea. If you are paying high interest on a personal loan, a personal loan balance transfer can save some money for you. A balance transfer can also be used for other types of loans like home loans.
What is a balance transfer?
A personal loan balance transfer involves transferring outstanding personal loan balance from one loan account to another, often switching between two different lenders.
What are the benefits of balance transfers?
- Better interest rates – Balance transfer can be done when a different bank is offering lower interest rates as compared to the existing bank’s rates. This can save you money in the long term and allow you to easily make the loan repayment without causing a financial burden.
- Top-up loan – Balance transfer can be especially useful when another bank is offering a top-up loan in combination with a balance transfer facility. This can prove beneficial especially when you require additional funds.
- Option of a different bank –With a balance transfer, you can avail better services from a different bank. This can even translate to modifications in loan terms that can benefit you in the future.
Balance transfer facility must be used only when a different bank is offering better interest rates and other terms. In some cases, there may be a cost associated with balance transfer that must be considered against the benefits to be availed from lower interest rates. It is important to read all the terms and conditions before opting for a balance transfer.