Use Balance Transfer to Trim your Loan EMI

Do you possess a loan whose EMI has been going on for ages? Have you been too occupied earning money only to pay it all in loan installments? Have you given up on finding a way out for this vicious EMI circle? Then you surely need to go through the remaining article to know how to get out of this terrible cycle.

Balance transfer is an effective tool to make you pay smaller EMIs and hence save money.

What is balance transfer?

Balance transfer is the process of paying off one loan by availing another loan at a cheaper rate and thereby saving money on installments. This works best when people struggle with huge EMIs due to high interest rates.

Example: Ashok had been paying off a monthly EMI of Rs18000 for a personal loan that he had acquired a year back. One Saturday evening, he got a call from his bank’s competitor that he could consolidate his existing personal loan by taking personal finance from them at a cheaper rate of interest. The rates that they were offering would made his EMI come down by at least Rs2000 per month. Ashok visited the bank branch and found out more about it and ultimately decided to go for balance transfer. This made him save Rs.24,000 per year on his yearly instalment amount.

In case of home loans, balance transfer may play an even more vital role. This is because although the rates for home loans are lower than those for personal loans but the loan tenure is way higher than a personal loan. This means that greater benefits can be reaped even if there is a slight change in the interest rate.

Advantages of availing Balance Transfer

Here is a list of advantage of availing balance transfer facility for home loans, personal loans, and car loans or even for credit cards.

-       You can take advantage of prevailing low rates at any point of your loan cycle if you apply for balance transfer

-       Balance Transfer lowers your interest rate thereby reducing your monthly EMI

-       Banks are eager to offer balance transfer loans on original loans of rival banks, hence better rates can be availed

-       Attractive facility to make the most of market conditions. So go for balance transfer when the prevailing rates are low.

Points to watch out for balance transfer

While balance transfer sounds like a really easy and convenient way of reducing the loan installment, there are several points to watch out for before going for it.

-       Call up and ask your existing loan provider, in most cases banks are ready to match the rate the rival bank is offering for balance transfer.Would you like to check your EMI how much you will pay for the rest of months check through Bankbazaar’s EMI Calculator.

-       Check to be doubly sure that the new offer will certainly reduce your loan installment without increasing the loan tenure

-       Check for any processing fee that the other bank is charging for giving you a new loan. In case this fees is too high then you should look for other loan providers