Personal Loans are undoubtedly one of the most popular loan options in the market among customers. The reason: personal loans help customers in fulfilling their various financial needs such as marriage, travel, wedding, down payment of your home loan, etc. But do you know that lower personal loan interest rates can help you lower the repayment amount? Well, if you didn’t know this yet, don’t worry. Personal Loan interest rates directly affect your EMI amount via which you repay your loan amount.
That’s why customers always try to look for the lower interest rates so that they don’t put much pressure on their pockets. But there is one important thing that you need to know - Personal Loan interest rates depend on several factors such as Applicant’s age, Monthly Income, Employment Type, Job History, Residing Location, and most importantly, Credit Scores. But there is one another facility provided by lenders in which personal loan interest rates hold great importance. This facility is known as the Balance Transfer Facility. In this article, we will cover several things related to this facility, how much money can an individual save by opting for this facility, and what is the role of the personal loan EMI Calculator. So, keep reading. Role of Personal Loan Interest Rates in Balance Transfer As you know personal loans are considered to be unsecured loans and this is the reason lenders charge a high-interest rate on this facility so that they can reduce their credit risk. So what does the Balance Transfer facility do? Well, suppose you have an existing personal loan but you are feeling that the personal loan interest rates are a bit higher and you want to opt for a lower one. So, with this facility, you can easily transfer your outstanding principal to another lender at lower interest rates and save on EMI amount and interest outgo. But, there are a few things you should know before opting for the Balance Transfer facility. First, lenders charge a certain processing fee on this facility. It can either be a flat fee or a certain percentage of the outstanding amount. Remember, this fee varies from one lender to another. Second, lenders check your credit score to see your repayment behavior. Any missed repayments can delay your personal loan balance transfer. Now, let’s see how much money an individual can save by opting for lower personal loan interest rates with Balance Transfer. Let’s say an individual has a 5-year personal loan of INR 8 lakh at an interest rate of 15.99% per annum. Now after paying the EMI amount of INR 19,450 for two years without any fail, he wants to opt for a Balance Transfer at lower interest rates of 13.99% per annum. Total Interest outgo at interest rate of 15.99% per annum = INR 3,67,012 Interest paid till 2 years = INR 2,20,120 The principal outstanding balance at the end of 2 years = INR 5,53,315 New EMI amount at an interest rate of 13.99% per annum = INR 18,908 Interest outgo at new interest rate = INR 1,27,384 So, the total interest paid will be = INR 3,47,504 So, the estimated EMI savings will be = INR 542 per month (19,450 - 18,908) Similarly, the estimate interest savings will be = INR 19,508 ( 3,67,012 - 3,47,504) So, it is quite clear how choosing a lower interest rate of 13.99% per annum, an individual can save INR 542 per month when it comes to the EMI amount and INR 19,508 in the interest amount. All of these savings can be done only with the Balance Transfer facility. All of these calculations can be done by the Personal Loan EMI Calculator. Just put a few details into it, the tool will provide the results instantly.
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Anika Sharma
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