When it comes to managing your money, even carefully planned steps may need to be adjusted as unexpected expenses arise. If you find yourself dealing with multiple debts at once, it might feel like you don’t have any good options for paying them all off.
One possibility to consider is a balance transfer loan. A balance transfer loan is intended to help you address a number of debts at once, including a variety of credit cards and personal loans. You’re essentially taking out one large loan in order to pay off a number of other ones. This way, you only have one loan payment each month instead of several.
Along with balance transfer loans, you may have also heard of “cash advance loans,” “debt consolidation loans,” or many other similar-sounding loan products. We’ll explore the differences between these loans, and the pros and cons associated with them as well.
Balance transfer loans are specifically designed to help you pay all debts you may have at once. The process is fairly straightforward: you get a loan, list the creditors that need to be paid, and the amount each one should get. After you’ve covered all the eligible creditors, the rest of the loan goes to your account.
Balance transfer loans usually have a low annual percentage rate (APR) that doesn’t change over time. They also have fixed monthly payments which differentiates them from credit cards. Besides the typically lower interest rates, balance transfer loans are distinct from cash loans in that the money goes directly to creditors, whereas a cash loan is deposited entirely into your account.
Another attribute of balance transfer loans are the characteristic “grace periods.” This interest-free period usually lasts up to 12 months after you get your loan, and during this time you will make monthly payments without any interest accruing. If you can pay off the entire loan during the grace period you can avoid a lot of additional interest charges.
In contrast, a “debt consolidation” plan doesn’t typically offer a grace period, but the interest rates would likely be lower than that of a balance transfer loan after the grace period ends. Hence, debt consolidation could be a better choice if you intend to pay it off gradually over an extended period.
When it comes to the amount of money you owe to lenders, there are limits to how much you can pay through a balance transfer loan. Additionally, some creditors can’t be paid using this method.
A maximum of twelve different loans can be paid through balance transfer. However, the following ones never make the cut:
Different lenders will have their own set of rules and regulations. There are many different types of loans and credit cards, so you’ll need to make sure they can be paid off with a balance transfer loan before you sign for one.
After being approved and signing for your loan, it may take a couple of days for your creditors to receive the payments. Until you get a confirmation that your debt has been paid, it’s best to keep up with regular payments.
The pay-off date for your loans may vary, depending on how the payment is sent to each lender:
At CreditNinja, we keep the process as simple as possible, with a quick application and clear terms and conditions. Apply for a balance transfer loan today with CreditNinja.
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