4 Things You Probably Did Not Know About Balance Transfer Facility on Loans

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:

1. 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
2. Balance transfer facility does not mean that only the interest rate will change. You can negotiate repayment period, EMIs, etc. with the new lender
3. 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
4. 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?