Understand more on Balance Transfer of Loan
Balance transfer of loan refers to switching of a loan from one bank to another to avail lower rate of interest. These days, many banks are providing lower interest rates for gaining business. This facility helps the customers for two reasons: savings of interest and obtaining larger loan amount.
If you are really not satisfied with the higher rates of interest of your bank, then you can move to another. You must close the existing loan account and open another in your new bank. Who wouldn’t like to make savings on lower interest rate? Though it sounds exciting, you must follow the methods of balance transfer of loan properly. Just don’t look only at the interest rates. Please go through the other terms and condition of your new bank attentively.
Look before you borrow more
If your new bank is trying to attract you with higher amount, then be careful. Are you able to repay it or not? Study your financials carefully and then, take a suitable decision.
Processing fees and other charges
Your new bank may have different charges such as stamp duty, valuation fees, legal fees, processing fees, and other relevant charges. Take an estimate of these charges and compare it with the benefit earned due to lowering interest. If the charges are less than the interest to be earned, then you are taking a right decision of going for balance transfer of loan. This method helps in understanding the integrity of your decision. After all, it is the benefit that you are looking for.
Offer less security
If the outstanding balance of your loan is less, do not give the entire security to your new bank. You must ask the bank for permission to give less collateral security. You must always discuss with your bank and negotiate on the terms. Try to give less security or lessen the interest further. This is because if you are paying the same interest even when your loan amount is less, then it is not a good deal for you.
Ease of banking
Most of the banks in which you have applied for balance transfer will ask you for to open a savings account. You need to examine its charges and other account requirements. What type of facilities is your new bank providing to you?
Remember, you are a regular customer of your existing bank? You are familiar with the systems, processes and staff. Hence, you must also gain awareness with respect to your new bank. Your banking process must be easy and convenient for you. If your existing bank staff is impolite or not efficient in providing you banking services, then balance transfer is the best option for you.
Read the terms before you apply
This is an important step before applying for balance transfer. Go through the terms and conditions governing the new loan. Some banks also provide facilities such as credit and personal accident insurance. Check the validity and charges attached to the credit card. Do you really need insurance or you are not happy with your existing insurance? To conclude, accept what is actually needed from the bank.
Thus, balance transfer facility is very useful in saving interest rate and must be availed after careful analysis.