When you are trying to pay off your debt, decreasing your interest rate can significantly assist. There are a few tools that offer that option, including personal loans and balance transfers.
Personal finance is a multi-purpose loan with flexible repayment terms. In contrast, a balance transfer personal loan to a credit card helps you pay your residual debt on a credit card with 0% interest for a restricted time.
Following are the points to know what makes personal finance a better option than those mentioned above:
- Personal debts typically come with a longer repayment term of up to six years. These can significantly ease your EMI payments every month. In contrast, a balance transfer card offers an initial interest-free period that lasts up to eighteen months or less. Thus, we can say, personal credit enables you a flexible and longer repayment term. Personal loans and balance transfer cards can help you pay down debt, but a personal loan is a better choice if you need more time.
- Various lenders provide personal credit at competitive interest rates, enabling you to save a significant amount in the long run. Since it is an unsecured loan, you do not have to keep any collateral against it either. In a personal loan balance transfer credit card, lenders typically charge you 0% interest on repayment. But this introductory offer is appropriate only for a restricted time, and the interest rate rises after it ends quickly.
- As you know, outstanding debt can be extremely harmful to your credit score and make it trickier for you to borrow a personal loan. This is because a low credit score can reduce your loan eligibility for the lender. Once your loan application is approved and you start paying off your instalments, your credit score can improve significantly. Hence, paying off your loan dues on time can be a way to enhance your CIBIL score and credit profile in the long run. With the online personal loan EMI calculator, you can calculate the personal loan interest rate you need to bear and the EMI.
- Opting for a credit card balance transfer to a personal loan may not be the best move. The latter enables you to do much more than pay off your debts. For example, you can quickly pay off your medical bills, revamp your bedroom, or enrol your kids in premier institutions with the assistance of personal finance. But a balance transfer card cannot offer this much flexibility as it comes with a credit limit. Moreover, the amount you can borrow is usually less than a loan, so it becomes inconvenient if you have several debts to look after. An online personal loan EMI calculator is a simple tool that calculates the EMI you need to pay for the loan repayment every month.
Any financial decision necessitates careful consideration of several factors.
A personal loan balance transfer is not diverse. Though it has several advantages, one has to evaluate all the factors to determine its advantages.
You can consider the following points:
- The new lender may throw in quite a few offers to entice you. Go through these offers cautiously to understand if they really suit your requirements and then take up the balance transfer. You may buy a product for its added offers and wind up not using any of them. To avoid this, enquire about the offers’ terms and conditions before making a decision.
- Calculate the actual monetary advantage you will attain. Once you get an offer, estimate the actual monetary advantage you will create through the balance transfer. This will assist you in deciding if it is worth going for the balance transfer.
- Take time to go through all the terms and conditions of the new lender’s product. Read the fine print to know what you are getting into. This can avoid any future disappointments or undesirable surprises.
While these financing options can help you deal with your debts quickly, personal credit has significant advantages over a balance transfer card. It enables you to plan your finances better and offers you a longer tenure to clear the debt at your speed.
When your approach a lender or want to repay your loan amount, keep these points in mind.
