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Why use a personal loan for balance transfer?
Posted on Tuesday, March 20th, 2018 | By IndusInd Bank
Festive season is around the corner and so are big offers and discounts. This is a great time to tick off items from your long pending bucket list. But heavy shopping during the festive season can leave us in heavy credit card debt. What few of us are unaware of is that we can opt for personal loan to pay off our credit card balance. This transfer of unpaid amount from another loan or credit card at a lower interest rate is known as “balance transfer.”
You must be thinking if it is wise to take another debt in the form of personal loan to pay off your current debt. Here are a few reasons why you should consider doing so:
1. Better interest rate: You can take a personal loan at a lower interest rate depending on your credit worthiness. You can enjoy interest rate as low as 15% in case of personal loan balance transfer. This way, you can save big on the interest amount on your credit card or any other form of debt.
2. Additional amount: A top-up loan facilitates you to borrow money. Apart from the balance transfer amount, you can get additional amount for emergency or another purchase.
3. Better services: If you are dissatisfied with the services of your current lender, then you do not have to wait to pay off your balance dues. Personal loan for balance transfer is the best option to discontinue your relationship with your current lender and start afresh with another one.
4. Better terms: Opting for a personal loan for balance transfer can fetch you a better deal in terms of EMIs and longer repayment tenure. With personal loans, you do not have to shell out huge money as credit card EMIs and hence you can continue to maintain your lifestyle.
Now that you are considering a personal loan for balance transfer, you should keep these factors in mind before zeroing in on a bank:
1. Additional benefits: As a welcome gift, most banks give add-ons like gift coupons, discount cards, a free credit card, or personal accident insurance. It is quite natural to get lured by such offers. It’s better to go through the terms and conditions carefully before making a decision.
2. Total deal: you need to evaluate the total package you are getting, that is, the interest rate and duration. If you are getting a lower interest rate but the duration is more, you will end up paying more. Always compare your current and new options.
Applying for a personal loan for balance transfer is an easy process.
1. Submit an application to the current lender for loan transfer from another bank.
2. Your current lender will issue you a Foreclosure proposal and a No Objection Certificate (NOC).
3. The Foreclosure Proposal will contain the total amount due
4. Apply for personal loan balance transfer at the new bank and attach both these documents.
5. The bank will evaluate your documents and after thorough scrutiny, it will put in the approval stamp.
6. The bank will then sanction the closure amount to close the loan with the current lender.
7. All the previous documents will be handed over to the new bank along with PDCs or collaterals.
Personal loan for balance transfer is a great way to save on interest charges and have a good credit rating score. Therefore, always go for balance transfer option if you are heavily burdened with extra expenses.
