Bangalore: There are so many banks and financial companies which always do their best to attract you by offering loans at lower interest rates. But as a borrower, you must not blindly follow this suit and transfer your loan from one bank to another.  “You can move your high-cost loan from any other bank to our bank and not only save on interest but also avail a higher loan amount” is the pitch from many banks, reports moneylife.in. Always remember, “Too much sweetness, too much gale.” So before you fall for these words and decide about transferring your loan, don’t forget to look into these six factors:

1. Calculate the Total Outflow

Before choosing a lower EMI and longer loan tenure offered by a new lender, make sure that such facilities does not increase the total amount you pay to the bank because longer the tenure, more and more the interest will keep on adding to the outstanding loan amount. If you are not running short of money, then better pay larger EMIs with your current bank and end your loan as soon as possible to save some money which you would overpay by opting for a longer tenure.

2. Study the Processing Fees and Other Allied Charges

There are a number of charges you would be required to pay to your new lender at the time of loan transfer that include processing fee, stamp duty, legal charges, valuation fee, technical charges and other related fees. Generally, processing fee is charged at the rate of 0.5 percent or 1 percent of the of the total loan amount.

If you want to know whether switching bank prove to be a profitable or non-profitable move, then first sum up all these cost and compare it with the benefits in terms of lower interest rates.

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