After balance transfer you pay lower interest rate on your loan than before. How appropriate is it for you to transfer the balance in such a situation? This is important for you to know.
Benefits of Personal Loan Balance Transfer
Banks offering personal loan balance transfer facility have lower interest rates. In such a case, if your outstanding balance is high, you will have to pay a lower total interest on the loan after the balance transfer. Also personal loan balance transfer also gives you the option of choosing a longer tenure for your loan which reduces your monthly EMI burden considerably. Apart from this you can also get a top-up personal loan facility from a new bank.
How can I transfer the balance?
Before transferring a personal loan balance you should compare the current interest rate of the loan and the interest rate of the bank you wish to transfer the loan to. After that find out about balance transfer charges etc. To transfer loan you need to submit NOC and complete repayment documents to your previous bank after applying for foreclosure. Thus, close your loan account in the previous bank and pay the next EMI by submitting your documents to the new bank.
What will be the impact on interest and EMI?
If you transfer personal loan balance from one bank to another bank, you will see the biggest benefit in the form of lower interest rates. By doing a balance transfer you will slightly reduce the total interest on your loan. Apart from this you also get the option to extend the loan tenure while doing personal loan balance transfer. Doing so may reduce your monthly EMI burden a bit.