Everyone comes across moments in life when they wish they could change a decision they made. However, when it comes to financial matters, a hasty choice can lead to a hefty additional charge. If you took out a personal loan with a heavy interest fee but now feel like there are better options for you, there is no need to fret. Thankfully, most banks and financial institutions offer a personal loan balance transfer option.
What is a Personal Loan Balance Transfer?
A personal loan balance transfer is a process by which a customer with an existing personal loan can shift their outstanding balance from one lender to another. This need not be a switch to another unsecured personal loan. If you have assets that can act as security, then you can transfer to a secured loan, like a gold loan, and enjoy the benefits of a gold loan, such as lower interest.
When you decide to transfer your personal loan to another lender, it is important to carefully weigh the pros and cons of such a transfer. Usually, a balance transfer will involve certain charges like preclosure charges and a processing fee. However, if you pick the right lender and the right switch, say a transfer to a gold loan, then the lower interest rates may cover the additional charges and still result in savings.
Factors to Consider for a Personal Loan Balance Transfer
1. Compare the Options – When you are looking to transfer your personal loan, always compare different lenders and loan options. For instance, a gold loan transfer could cost you much less than a transfer to another personal loan because of its secured loan characteristics. Secured loans have lower interest rate charges as they are backed by security.
2. Evaluate the Costs – As mentioned earlier, a personal loan transfer will entail certain additional charges like preclosure and processing fees. The new loan may also include a processing fee. Take these into consideration while calculating cost savings
3. Tenure – The new loan will come with new terms and conditions, in addition to new interest rates. A vital aspect to consider is the new tenure or duration of the loan. Check whether this timeline aligns with your initial goal while taking out the loan or if you can adapt to this new term.
4. Personal Requirements – Always compare the offer’s suitability to your requirements. If a loan transfer has lower interest charges but does not meet your other requirements like flexibility or longer duration, then it may not be worth it.
Reasons to Opt for a Gold Loan Transfer
When transferring a personal loan balance, there are several reasons to choose a gold loan transfer.
1. Lower Interest Rate – A gold loan is a secured loan, backed by collateral. Personal loans are usually unsecured loans. Due to this, the interest rates on gold loans are often lower than personal loan interest rates. You can save a considerable amount if you make this shift.
2. Flexible Repayment – A gold loan transfer will also give you the option to choose your mode of repayment. Personal loans may offer only an EMI repayment option. With a gold loan, you can choose to service the whole amount plus interest at the end of the tenure, pay only interest as EMI and repay the principal at the end, or continue with EMIs.
3. Tenure of Loan – Gold loans also give borrowers a choice in the duration of the loan. Personal loans are longer, usually ranging from one to seven years. Gold loans can be taken for seven days for up to five years.
How To Initiate a Personal Loan Balance Transfer to a Gold Loan
Transferring an existing personal loan to a gold loan is simple.
1. Documents from Existing Lender – The first step is to obtain a no-objection certificate and a foreclosure letter from your existing lender.
2. Start the New Loan Process – Once you get clearance from the existing lender to close your personal loan, begin filling out the gold loan application form. Most lenders will ask you whether this is a transfer. Furnish the relevant documents, proofs, and security for the same.
3. Disbursement Letter – Once the new gold loan is approved, request a disbursement letter with the outstanding loan amount in the form of a cheque or demand draft. Many lenders will make the transfer themselves. Verify what the process will be.
4. Begin Making New Repayments – After the transfer is complete, your old loan payments will get cancelled and new ones will begin. Keep a tab on your bank account to make sure these payments are going through based on the new arrangement.
Loan Transfer with Rupeek
When you choose a loan transfer with Rupeek, the entire process is simple, quick, and cost-effective. You can make the transfer online through our website or app, or via a phone call, all from the comfort of your home. A Rupeek executive will collect the assets and documents required for a gold loan to help you through the process. In addition, we will also send you a consolidated and personalized report that will outline how much you save via the transfer. A gold loan transfer has never been easier!
