As easy it is to get a personal loan, managing and repaying it can be difficult due to the high-interest rate. Which leads to applicants looking for alternate ways to reducing their outstanding debt. While there can be many ways, one of the most common is to use the personal loan balance transfer.

What is a Balance Transfer?

A personal loan balance transfer is transferring the current personal loan to a comparatively lower interstate. This leads to a reduction in your monthly EMIs. As simple and beneficial as it may sound, it also leads to a change in the terms and conditions of the loan.

Benefits of Balance Transfer

You can easily get a personal loan from various lenders; the balance transfer option helps you get a fresh chance to ease your EMI burden. Some of the benefits of Balance Transfer are:

1.      Reduced Tenure:

Each lender can have different balance transfer terms, based on the terms of your lender you can expect a marginally reduced loan tenure with Balance Transfer. While this may be good news as you will be debt-free sooner, it can also be stressful for many. However, if you have opted for a long-term repayment period then the balance transfer can really be in your favor.

2.      Lower Interest rate

If you are feeling bogged down by your high monthly EMIs then, the balance transfer can be of great help in transferring your existing loan to a different financial institution at a lower rate. However, make sure that you are using the personal loan EMI calculator to get a holistic idea of the new loan terms before you opt for a balance transfer. Certain additional factors like processing fees, loan tenure, or other charges must also be taken care of before you take the step.

3.      Increase in Your Credit Score

Dragging the personal loan for long can somewhat negatively affect your credit score and hamper future loan chances. However, transferring to a different institution will increase your credit score, leading to more credit options in the future.

Most of the financial experts believe that balance transfer of personal loan can be a good move in the long term and make your finances better. Make sure you go through the pros and cons of the deal before you make the final decision.

Must Read: 9 Surprising benefits or advantages of taking a Personal Loan