Sometimes we end up taking loans at higher rates of interest because of which making the monthly EMI payments tend to become a huge burden. For this purpose, a balance transfer of yourcan be done.
What is a Balance Transfer?
In Balance Transfer, the entire unpaid loan amount is transferred to another bank which is offering a lower interest rate. In simple terms, now you just have to pay your EMIs to the bank you’ve transferred your loan to, at the new (and lower) interest rate.
How will it help you?
- Reduced interest rates: A balance transfer provides the benefit of reduced interest rates. The new bank will generally offer you a low interest rate than the original bank, thus decreasing your EMI amount and total interest liability. To claim the maximum benefits of a Balance Transfer, opt for a Balance Transfer during the initial period of your loan tenure.
- Longer tenure: While switching to a new bank, you can re-negotiate the loan terms with the new bank and ask them to extend the repayment tenure. This allows you pay lower EMIs over a longer period of time.
- Improved Credit Score: If you had regularly paid your past EMIs completely and on time, but foresee that it will be difficult for you to make complete payments for the next few months because of some unexpected financial constraints, it is wise for you to consider transferring your personal loan. This will increase your credit repayment cycle and also help in maintaining your high Credit Score.