Banking experts warn that the decision to transfer a loan from one bank to another can become a long-term burden. The main temptation banks offer is a 'grace period' before starting repayments, which can range from two to seven months without paying installments. However, borrowers should be aware that banks calculate interest on this deferred payment, both at the beginning of the repayment period and throughout the loan term, in addition to a transfer fee of 105 dirhams for each postponement. Many borrowers mistakenly believe that the bank only charges a transfer fee, but in reality, there is an increase in the interest rate and the monthly installment amount. This becomes clear in the final months of repayment when the borrower expects a specific date, but the bank extends the term due to the transfer, resulting in a total amount higher than originally agreed upon. The core of a bank's activity is 'accumulated interest,' meaning the longer the loan term, the more interest is earned. Therefore, even a slight reduction in the monthly payment by extending the term practically means an increase in the total cost of the debt. Experts advise borrowers to find out the total cost of the loan, including all fees and interest, create a detailed schedule before and after the transfer, and compare the total amount in both scenarios. Some borrowers report that bank employees, during marketing calls or WhatsApp messages, do not disclose full details about the fees and interest accompanying offers to transfer debts. They emphasize that the only advantage of these offers is a temporary relief from the burden of debt for several months, especially when facing essential commitments like school fees. However, it later becomes apparent that these deferments are very costly. On the other hand, two banking experts state that a borrower's decision to transfer a debt varies depending on personal circumstances, but there are criteria that must be verified before making a decision. The most important of these is a lower interest rate in the new bank compared to the current one, as well as a lower monthly deduction. They stress the importance of asking about all fees for closing the loan in the current bank and those imposed by the new bank, noting that the 'grace period' is unfortunately an extension of the loan's life, leading to increased interest and, consequently, a higher monthly payment, plus additional fees. Banking expert Ahmed Yusef stated that a loan transfer must be carefully considered and tailored to each borrower's situation. The process should only be undertaken if it is beneficial in terms of interest rates and monthly payment amounts. He explained that transferring a debt includes an early settlement fee in the first bank, a transaction fee in the second, and additional interest if the borrower chooses a 'grace period' before starting payments on the new loan, which extends the term and sometimes increases the monthly payment. Thus, a borrower may end up with a debt that is larger in both term and value. He outlined the financial situations where transferring a debt is a sound decision: when the interest rate in the new bank is lower than the current one; when the loan term is not extended in a way that increases the total cost; when the total fees are less than the savings from the lower interest rate; and when the goal is to reduce the monthly payment burden without significantly inflating the total debt amount.
