It is very much possible to transfer your existing education loan from one bank to another bank, and actually financially gain from such a transfer. Apart from lowering your interest rate you also can get a larger amount of loan. But instead of blindly rushing into it, you need to consider all the pros and cons associated with such a transfer of debt. You need to keep certain things in mind before you decide to switch your education loan, such as processing fees, education loan interest rate and other charges to see if your final outflow will be less or more.
Check Out Your Final Financial Outflow
New banks try to attract customers by offering lower EMIs, at a low education loan interest rate and a longer repayment schedule, which on the face of it may look attractive, but in the final analysis, it may turn out to be more expensive. So, do calculate how much you will be spending in both cases eventually, and then decide which scenario would be more suitable for you. If you are not too hard-pressed for cash, experts would advise you to continue with your present bank and pay larger EMIs, finish off your loan faster, even if the education loan interest rate is higher, and rest easy.
Processing and Other Fees Need to Be Factored In
Consider how much you will be shelling out for processing fee, stamp duty, valuation fee, and legal fees that your new bank will charge, then weigh it against the decrease in interest rate. After taking these things into account, if your feel that the new education loan in India would still be cheaper, then you can go with it, or else stick to your old education loan.
Associated Account Requirements
Ehen if you take an education loan in India, banks generally require you to open a savings account with them so that your EMIs can be routed through it. So, if you are planning to transfer your education loan to another bank, you will need to take this factor also into consideration – closing one saving account and opening another one with another bank, and the expenses it would entail.
In banking, as in all other sectors, personal relationships do matter; they can make the process and procedures easier. In other words, ease of doing business adds to a lot of peace of mind. If you transfer your education loan to another bank, and the staff does not cooperate much, it will only increase your hassles, interfere with your professional work, and generally make life harder. So, transferring your loan may not be worth it in such circumstances.
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