How is a personal loan balance transfer benefitting a borrower?

We all know how hard it is for the borrowers who have personal loans to pay the huge amounts every month. If this amount is avoided, then it will lead to a decrease in the credit score, which will affect future borrowings. So, the option of avoiding the payment is out of the list and in order to reduce the monthly payment and to get better offers, the only option is personal loan balance transfer. This is where the loan is transferred from one bank to another who is offering better services.

Know how this transfer of loan is benefiting a borrower.

1. Lower interest rates: It is always an advantage to the borrower if the interest rate that is paid every month is decreased. When the borrower plans to transfer his loan, the first thing that they see for is if the interest rate is low or not. If the new lender is offering the loan at a much lesser rate, then this will also lessen the borrower’s burden further. Generally, when the loan is transferred the new lender will offer 2-3% lesser than the previous one. Even if it is a 2% decrease, that will be a huge difference when it comes to overall payment and monthly payment. Example: If the existing rate is 12%, then the new lender will reduce it to 10%.
2. Monthly payments are reduced: Generally, a loan is not preferable because there will be huge payments that have to be made every month. Payment of this huge amount will cause financial stress and burden and that is the reason most of them do not choose one, but if the borrower is already having a loan, where he is paying huge amounts. Then that loan can be transferred to another bank, where he will get the interest rate less and decrease in the monthly payments. The borrower can also re-negotiate the loan tenure period and can be extended accordingly.

Before doing this, calculating the loan amount with that of the tenure is very important.

1. Top up loan: We never know when we need extra money and the borrower might have confusion that whether the lender will give another loan after already having an existing loan. When the loan is transferred, then the borrower can ask for a top-up loan with much better rates to the lender. In this way, getting more funds from the lender is made easy and will also reduce the average cost of loans that the borrower has availed.
2. Better bank, better services: If you are just annoyed with the way the representatives in the bank are offering the services, then it is time to switch the loan to another bank and get better deals and offers. Look out for the banks that offer overall better services compared to the existing bank.

The borrower is not required to stick to the bank even after experiencing bad services just because they hold a loan in that bank. The loan can be transferred to another bank by opting for balance transfer option and get favorable deals and offers.

Hello, I am Alvina working as a content writer in Hyderabad.