4 Things You Probably Did Not Know About Balance Transfer Facility on Loans
What is a balance transfer and why you should avail of it.
A process that allows a borrower to transfer their outstanding principal amount to another lender is known as a balance transfer. Most types of loans such as personal loans, home loans, education loans, and vehicle loans come with a balance transfer facility and most banks offer it. In fact, lenders are happy to onboard a new loan customer even if it is via a balance transfer.
A balance transfer facility offers plenty of benefits and yet few borrowers avail of it. Why? Because they have no idea about these 4 things:
- Banks usually offer lower interest rates to new customers. This means they have to pay less interest on the loan from a bank they have no relationship with as compared to the loan they have with the existing lender
- Balance transfer facility does not mean that only the interest rate will change. You can negotiate repayment period, EMIs, etc. with the new lender
- Some banks offer top-up loans on balance transfer facility especially on personal and home loans. This means you can use it for debt consolidation to pay off other debt
- There is no restriction on how many times you can opt for balance transfer. Once you have serviced the lock-in period of the loan, you can avail of it as many times as you need
So what do you think? Balance transfer facility: Yay or Nay?