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Learn about the personal loan balance transfer facility. Explore features, benefits, eligibility, interest rates, and how to apply easily on Bajaj Markets.
Personal loan balance transfer 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 reduces your monthly obligations and makes repayment easier to manage. Even a small reduction in interest rates, such as 0.5% to 1%, can lower your EMIs and generate savings over the loan tenure.
To transfer your loan, first obtain a foreclosure letter from your current bank. Then apply for a personal loan with another bank offering a lower rate and suitable features. The new bank clears your existing loan, and you continue repayments at reduced EMIs.
Lower interest rates help reduce your interest burden. Evaluate the offer and compare interest rates and other features before making a personal loan balance transfer.
A personal loan transfer may allow you to negotiate the loan tenure and extend it according to your repayment capacity.
Many lenders offer a top-up loan facility with personal loan balance transfer.
The outstanding loan balance is paid directly to your previous lender, and the additional loan amount is credited to your account.
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Depending on your credit history, other lenders may offer better features, such as waiver of the last EMI, zero processing fees, or lower interest rates.
A personal loan balance transfer can reduce your interest burden and provide loans with improved features.
Read MoreA personal loan balance transfer EMI calculator allows you to estimate your revised monthly instalments after transferring your loan. It enables comparison of different interest rates and tenures, helping you identify the most cost-effective option and manage your finances more efficiently.
Before proceeding with a balance transfer, review and compare the interest rates offered by leading banks and financial institutions. Refer to the table below for further details:
| Name | Starting Interest Rate (per annum) |
|---|---|
10.85% |
|
Axis Bank |
10.99% |
10.99% |
|
IndusInd Bank |
10.49% |
9.99% |
Disclaimer:The interest rates mentioned in the above table are indicative and can change as per the bank’s discretion.
Interest rate is a major factor that affects the overall affordability of your loan. Besides, there are a few associated charges that can significantly affect your loan cost. Find details about them in the table below:
| Fees and charges | General Range |
|---|---|
Processing fees |
Up to 2% of the loan amount |
Foreclosure and prepayment charges |
1% to 3% of the outstanding amount |
Late Payment Fee |
2% of the unpaid EMI |
Disclaimer:The charges mentioned in the table are not absolute and may change as per the lender. Additionally, some lenders do not levy any charges on loan foreclosure or prepayment.
The following are the key eligibility criteria for a Personal Loan balance transfer:
The outstanding loan amount needs 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
To make your personal loan balance transfer process smooth and hassle-free, you need to keep the following documents ready:
| Document Type | Details |
|---|---|
Identity Proof |
PAN Card, Aadhaar Card, Voter ID, Driving License, or Passport |
Address Proof |
Utility bills, Passport or rental agreement, etc. |
Bank Statements |
Statements showing financial history |
Income Proof |
Latest salary slips or income documentation |
Foreclosure Letter |
A letter from your current bank stating the loan status |
You can easily transfer your personal loan from one lender to another by following the steps mentioned below:
Use the Personal Loan Balance Transfer Calculator to assess your eligibility. This also provides an estimate of potential savings.
Prepare and submit all required documents for the transfer. Having them ready ensures a smooth and timely process.
The lender reviews your application and evaluates your credit profile along with the loan details before granting approval.
After approval, the existing loan is closed with your current lender. Repayments then continue with the new lender at revised EMIs.
Before opting for a personal loan balance transfer, consider the following things:
Confirm that the new lender offers a lower rate than your existing loan. Use an EMI calculator to compare repayments and evaluate potential savings.
Account for processing fees, foreclosure charges, and other expenses linked to the transfer. Factor these into your calculations to gauge the true benefit.
Review all terms thoroughly. Pay attention to hidden charges, clauses, or restrictions that may impact your repayment.
Maintain a strong credit score to enhance your chances of approval and secure more favourable rates. Review your credit report before applying.
Ensure the transfer meets your financial objectives. Compare tenure, repayment terms, and top-up options with your actual requirements.
Assess whether the new lender provides repayment flexibility. Options like part-prepayment, foreclosure, or EMI restructuring can support better financial management.
Suppose you took a personal loan of ₹5 Lakhs for 5 years at 15% p.a. After paying 12 EMIs, you transfer the balance to another bank offering 11.50% p.a. With this transfer, your EMI reduces, and the overall interest you pay during the remaining tenure becomes lower.
This eases your monthly repayment burden and saves a significant amount on total loan cost.
Any individual with an active personal loan from a financial institution can transfer the loan to another bank or NBFC if offered more favourable terms.
A balance transfer is advisable when another lender provides a lower interest rate, improved repayment options, or additional benefits. This allows you to reduce EMIs and overall interest outgo.
If you opt for a balance transfer on your personal loan, the repayment tenure ranges from 1 year to 8 years.
While the cost involved varies from lender to lender, generally, two types of charges are to be paid on a personal loan balance transfer:
Foreclosure Charge: It generally ranges between 1% to 3% 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 is typically up to 2% of the loan amount.
Yes, you may choose to transfer your personal loan to a lower interest rate by searching for a lender that offers financing at low interest rates.
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.
It is good to transfer a personal loan to another bank if the current interest rate you are paying is too high. However, consider choosing the right time to opt for this facility, as it can impact your interest rate.
Typically, the personal loan balance transfer facility is available to salaried individuals who meet the following criteria:
The outstanding loan amount of at least ₹50,000
A record of your personal loan EMI payment
Ensure all EMIs have been paid in full
If you have multiple credit accounts, you need to ensure all are in good standing as per the requirements
The EMI after a balance transfer depends on various factors such as the revised interest rate, outstanding loan amount, and repayment tenure. You can use an EMI calculator to obtain an accurate estimate.
Yes, you can transfer your personal loan to another bank that offers lower interest rates or improved loan terms.
Yes, you can shift your existing personal loan to another lender offering more competitive rates or favourable repayment options.
Yes, the new bank will clear your outstanding loan, and you will repay the new bank at the revised interest rate.
Yes, transferring your loan to another lender allows you to benefit from reduced rates or improved repayment flexibility.
A personal loan is ideal for new expenses or specific financial needs, offering a lump sum amount with fixed interest rates. A balance transfer is best for consolidating existing debt, allowing you to move balances to a lender with lower interest rates. Choose a personal loan for new borrowing and a balance transfer for reducing interest on existing debt.
Yes, you can shift your personal loan from your current bank to another bank with lower rates or more flexible terms.
A balance transfer may cause a minor short-term dip in your credit score due to the fresh loan application. However, consistent and timely repayments on the new loan can help improve your score over time.
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