Personal loan balance transfer (PLBT) is the process of transferring your personal loan from your present lender to a new lender. If you have an outstanding loan with a high interest rate, you can transfer it to another lender and enjoy a lower rate of interest. This transfer of balance allows you to lower the burden of your monthly obligations.
While Personal Loan Balance Transfer charges might vary from lender to lender, generally, you must pay two types of charges for transferring your personal loan to a new lender:
Foreclosure Charge: It is usually around 5% of the outstanding principal amount. It needs to be paid to your present lender.
Processing Fee: This fee is to be paid to the new lender with whom you wish to transfer your loan. It usually ranges from ₹999 to up to 2% of the loan amount.
Better Rate of Interest: Lower interest rates reduce the borrower's interest burden. It is always better to assess the need, evaluate the offer, and compare the interest rates and other features before making a Personal Loan balance transfer.
Longer Loan Tenure: When you transfer a personal loan, you can potentially negotiate the tenure and get it extended as per your requirements. With an extended loan tenure, you can have a lower monthly burden of EMIs but a higher total interest payout.
Top-up Loan Facility: Many lenders offer a top-up loan facility with personal loan balance transfer. In the case of top-up loans, the outstanding loan balance is directly paid to your previous lender and the fresh loan amount is credited to your account.
Better Personal Loan Features: Depending on your credit history, you may get an offer from other lenders offering better features on personal loans such as waiver of last EMI, zero processing fees, lower interest rates, etc. The personal loan balance transfer facility can, thus, not only reduce your personal loan interest burden, but you might also get a loan with better features.
The following are the key eligibility criteria for a Personal Loan balance transfer:
The outstanding loan amount has to be at least ₹50,000
You need to provide a record of your personal loan EMI payment. Ensure all of them are cleared or at least the previous twelve instalment payouts of the existing loan will be checked
If you have numerous loans/credit cards, you need to ensure all are in good standing as per the requirements
You need to submit the following documents while applying for a personal loan balance transfer:
Application Form |
A duly signed Personal Loan Balance Transfer application form |
Identity Proof |
PAN card/driving licence/passport/voter’s ID/Aadhaar card, etc. |
Address Proof |
Aadhaar card, passport, landline bill, electricity bill, rent agreement, etc. |
Age Proof |
PAN card/driving licence/passport/voter’s ID/Aadhaar card, etc. |
Income Proof (for salaried employees) |
Bank account statements for the last 6 months Salary slips for the last 3 months |
Income Proof (for self-employed individuals) |
The balance sheet of the last 3 years along with the profit and loss statement of the business Bank statements of the last 6 months of individual and business |
You can easily transfer your personal loan from one lender to another by following the steps mentioned below:
Once the balance transfer process is complete, your old lender will receive the outstanding amount from the new lender. Post this, you owe the outstanding amount to the new lender.
Let us assume that you have taken a personal loan of ₹5 Lakhs from a bank/NBFC at an interest rate of 15% p.a. for a tenure of 5 years. Now, after having paid 12 EMIs, you wish to transfer this loan to a new lender who is charging an interest rate of just 11.50% p.a. In this case, you will be saving ₹35,710 on the total interest amount. The following table gives you an illustration of the EMI payable to the new lender and your net savings:
Original Loan Amount |
₹5 Lakhs |
Existing Rate of Interest |
15% p.a. |
Original Repayment tenure |
5 years (60 months) |
EMIs Paid |
12 |
EMIs Pending |
48 |
Existing EMI |
₹11,895 |
Outstanding Loan Amount |
₹4,27,401 |
New Rate of Interest |
11.5% p.a. |
New tenure |
48 months |
New EMI |
₹11,150 |
Total Savings |
₹35,710* |
Disclaimer: Please note that lenders charge a foreclosure fee on Personal Loan prepayment so net savings may vary. Please check with your lender before proceeding.
Anyone who has availed a personal loan from a financial institution can get their loan transferred to another bank/NBFC if they feel they are getting a better offer.
A personal loan balance transfer is an ideal solution to settle your debts at a lower interest rate. A personal loan is transferred to save on the interest amount and reduce EMIs by switching to another personal loan with a lower interest rate. Moreover, you can also avail an additional top-up from the new lender.
If you opt for a balance transfer on your personal loan, the repayment tenure usually ranges from 1 year to 5 years.
While the cost involved varies from lender to lender, generally, two types of charges are to be paid on personal loan balance transfer:
Foreclosure Charge: It can be anywhere between 2% to 5% of the outstanding amount depending upon the lender. This foreclosure charge needs to be paid to your existing lender.
Processing Fees: This fee needs to be paid to the new lender, where you want to transfer the loan. It usually ranges from ₹999 to up to 2% of the loan amount.
Yes, you certainly can. Most banks offer a top-up loan facility along with personal loan balance transfer. In the case of top-up loans, the outstanding loan balance is directly paid to your previous lender and the fresh amount of loan gets credited to your account.
Personal loan balance transfer does not directly affect your credit score. However, if your loan EMIs are reduced, it would be easier for you to ensure timely repayment, which will improve your credit score in the long run.
No, since a personal loan is an unsecured loan, you need not submit any collateral while applying for a personal loan balance transfer.