Personal loan balance transfer to banks with lower interest rates offers advantages for those with substantial outstanding amounts.
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Loan balance transfer or loan transfer refers to the process of shifting the principal amount from one financial institution to another. When acquiring a personal loan from one bank, one has the option of availing a balance transfer facility to another bank. This process helps transfer the loan without requiring any collateral or security for the new lender, similar to a regular personal loan.
While there may be some charges associated with the personal loan balance transfer, it offers numerous benefits as well. Considering a balance transfer can provide a lower interest rate compared to your current loan.
It is, however, essential to assess its suitability for your financial situation. Evaluate potential savings, charges, tenure and additional benefits from the new lender. Making an informed decision ensures the balance transfer is beneficial for you.
Benefits of Personal Loan Balance Transfer
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Personal loan balance transfer to banks with lower interest rates offers advantages for those with substantial outstanding amounts. It reduces the total interest paid on the loan and allows opting for a longer tenure, easing the monthly EMI burden. Furthermore, the option of a top-up personal loan from the new bank provides additional funds for various needs.
Process of Balance Transfer
When considering a personal loan balance transfer, it’s crucial to compare the current interest rate with that of the new bank. Additionally, inquire about any balance transfer charges. To proceed, obtain a No Objection Certificate (NOC) and apply for foreclosure from your current bank. Once you have the required documents, submit them for repayment. This process will enable you to close your loan account with the previous bank and transfer it to the new bank, where you can continue paying the subsequent EMIs.
Effect on Interest and EMI
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Transferring your personal loan balance from one bank to another boasts numerous benefits in the form of a lower interest rate. It leads to a reduction in the overall interest on your loan. Additionally, with a personal loan balance transfer, you gain the option of extending the loan tenure. This can help alleviate the burden of your monthly EMI payments.
