Save Repayment By Personal Loan Balance Transfer Facility

A personal loan is one banking product that helps customers fulfill their different needs and emergency financial needs. Lenders provide the loan amount without any security and this is the best part about it. But lenders check the eligibility of an individual thoroughly before sanctioning the loan amount. The only thing that troubles customers usually is the higher interest rates on a personal loan due to its unsecured nature. Do you know that with the help of a personal loan balance transfer facility, you can reduce both your EMI amount and interest outgo?

Well, yes. Lenders provide the Balance Transfer facility with which customers can transfer their principal outstanding balance to some other lender at lower interest rates. Since the new lender is providing the lower interest rates than your current one, your EMI amount and interest outgo are bound to decrease. Personal Loan Balance Transfer facility is one of the finest methods to ensure maximum savings on your personal loan. So, if you are thinking of transferring your balance to some other lender as your current interest rates are pretty high, you can opt for this facility. In this article, we will be covering everything about Balance Transfer so that you can understand better.

Personal Loan Balance Transfer Eligibility Criteria

You need to remember that not everyone can opt for the Personal Loan Balance Transfer. Before approving your request, the lender ensures that you have been repaying your EMIs on time. If you have missed any of your EMIs, the lender may reject your application. Apart from this, the interest rates will also be decided on this and depend on a lot of other factors such as Age, Monthly Income, Employment Type, Job History and Credit Score. Individuals with high credit scores (700 or above) have higher chances to get the Personal Loan Balance Transfer Facility as compared to people with low scores.

Lenders also ask for a processing fee to opt for this facility that is usually a certain percentage of the principal outstanding amount or it can be a fixed amount.

How Much Money can be Saved with Personal Loan Balance Transfer?

As we said, you can reduce your EMI amount and interest outgo with this facility, let’s understand it more how much money you can save. We are taking an example of a person who has taken a 5-year personal loan of INR 4 lakh at an interest rate of 14.99% per annum.

According to this amount, the EMI amount will be INR 9,514 and the interest outgo will be INR 1,70,832

Now, after paying the EMIs for two years without any fail, he wants to opt for the Personal Loan Balance Transfer at a lower interest rate of 12.99% per annum.

So, the interest paid during these two years = INR 1,02,821

While the outstanding principal balance at the end of 2 years = INR 2,74,487

So, the new EMI amount at an interest rate of 12.99% per annum = INR 9,247

The interest outgo will be INR 58,413 according to the current interest rate.

So, the total interest paid during these 5 years = INR 1,61,234

Estimated Savings when it comes to EMI amount = INR 267 per month (9,514 - 9,247)

Similarly, estimated savings of the interest outgo = INR 9,598 (1,70,832 - 1,61,234)

So, you can see on choosing the personal loan balance transfer facility at a lower interest rate of 12.99% per annum, he can save INR 267 per month while approximately INR 10,000 on the interest outgo.