Should You Transfer Your Personal Loan from One Lender To Another?
Tarun Khetani from Mumbai had taken a Personal Loan from his bank at an interest rate of 13.25%. Then he saw his cousin take a similar loan from a non-banking finance company (NBFC) but at a lower rate of 12%. Alarmed at the higher interest he was paying, Tarun considered transferring his loan to his cousin’s lender.
The NBFC offered Tarun a Personal Loan at 12% too, but placed some clauses. After carefully considering the math, Tarun decided to stick to his original loan.
What are the various clauses you must understand before finding an attractive interest rate? Read on to know all about it.
What is a Personal Loan Transfer?
Transferring a Personal Loan means changing your loan provider. You transfer your loan account to another lender and pay the remaining EMIs to the new lender. The EMIs are often lower as the interest component is lower. But, the original lender may charge some fees during the transfer process.
Things to Remember before you Transfer your Personal Loan
Before you transfer your Personal Loan, you must check:
1. The interest rate: People mostly transfer a Personal Loan to get a better interest rate. Check the interest rate from the new lender. See how it will affect your EMI structure. Negotiate with your new lender to get a low-interest rate Personal Loan.
2. Your credit score: The transfer of a Personal Loan may not happen if you have a poor credit history or if you have defaulted on your existing loan. Lenders do not like unreliable borrowers so your transfer application may get rejected. Use a Personal Loan eligibility calculator before you approach your new lender.
3. The repayment terms: Consider a new lender if you can rework the repayment structure. The new lender may be more flexible and allow you to pay lower EMIs for a longer duration. This may be helpful if you foresee an unexpected financial slump.
4. Fees and charges: Next, calculate the fees and charges for the transfer process. You have to pay a prepayment fee to your existing lender. Add to that the processing fee, administrative fee, and the stamp duty for the new Personal Loan agreement. If the combined costs of these fees are very high, it makes no sense to transfer.
The bottom line
You wish to transfer your Personal Loan from one lender to the other. But find out if the interest rates are lower and the repayment terms are better. Apply for a Personal Loan transfer only if it is a financially feasible option. Take the interest rates, EMIs, fees, and charges into consideration. Do the math to see how much you will pay in total. This figure should be financially profitable for you to transfer your Personal Loan. Visit the Bajaj Finserv website to see how you can find an attractive offer for your Personal Loan application.