Personal Loan Balance Transfer

If you're servicing personal loan at a very high interest rate, switching to a new lender offering lower interest rate through balance transfer facility would help in reducing your EMI burden and total interest cost. In this page, we’ll walk you through everything you need to know about personal loan balance transfer - including interest rates, benefits, eligibility, documents required and process.

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Updated: 16-05-2025 13:46:07 PM

Find the Best Balance Transfer Offers on Your Personal Loan at Paisabazaar

HDFC Bank

Max. Loan Amt.

Up to ₹40L

Rate of Interest

10.9% - 24%

Tenure up to

Upto 6 Years

Processing Fee

₹6,500

10 Second Disbursal* 100% Digital Process* Quick Disbursal

Axis Bank

Max. Loan Amt.

Up to ₹10L

Rate of Interest

10.49% - 22%

Tenure up to

Upto 6 Years

Processing Fee

Upto 2%

Low Processing fee

Kotak Mahindra Bank

Max. Loan Amt.

Up to ₹35L

Rate of Interest

10.99% - 16.9%

Tenure up to

Upto 6 Years

Processing Fee

Upto 5%

Lowest Income requirement 100% Digital Process*

IDFC FIRST Bank

Max. Loan Amt.

Up to ₹10L

Rate of Interest

10.7% - 23.99%

Tenure up to

Upto 5 Years

Processing Fee

Upto 2%

Max Loan Amount 100% Digital Process*

ICICI Bank

Max. Loan Amt.

Up to ₹50L

Rate of Interest

10.8% - 16.5%

Tenure up to

1-6 Years

Processing Fee

Upto 2%

100% Digital Process* Quick Disbursal

What is a Personal Loan Balance Transfer?

Personal Loan Balance Transfer (PLBT) is a facility that allows existing personal loan borrowers to transfer their outstanding personal loans to a new lender offering lower interest rates and/or other favourable terms (such as higher loan amount, longer tenure, etc.). The lower interest rate availed through the balance transfer facility helps such borrowers to reduce their overall interest cost, making it especially beneficial for those who took personal loans at higher interest rates and now are eligible for much lower rates due to their improved credit profile.

Personal Loan Balance Transfer Interest Rates & Other Fees/Charges

The interest rates offered by new lenders on exercising personal loan balance transfer would usually be lower than the personal loan interest rates charged by your existing lender. However, the exact rate offered will depend on factors such as your outstanding loan amount, remaining tenure, credit score, income and other aspects of your credit profile.

As far as fees and charges are concerned, while exercising balance transfer, your existing lender may charge a foreclosure fee of up to 5% on the outstanding loan amount in case of fixed rate personal loans. No foreclosure charges are applicable if the personal loan was sanctioned at a floating rate of interest. Additionally, the new lender may levy a processing fee, which usually ranges from Rs. 500 to 4% of the outstanding loan amount.

Before finalising the loan, make sure to compare interest rates, processing fees, and other key features offered by multiple lenders. You can do this easily on Paisabazaar, which lets you compare loan offers from top partner banks and NBFCs and apply for the one that best suits your needs.

Benefits of Personal Loan Balance Transfer

A personal loan balance transfer offers multiple benefits, ranging from reduced interest rates to improved loan terms, helping borrowers manage their finances more efficiently. A few of these benefits are discussed as below:

Lower Interest Rate: One of the primary objectives of exercising personal loan balance transfer is to avail lower interest rate and thereby, reduce one’s overall interest cost.
Longer Repayment Tenure: Exercising personal loan balance transfer facility can also help a borrower to opt for a longer tenure than the residual loan tenure of his existing personal loan. A longer tenure will reduce then his monthly EMI burden. However, this would lead to a higher interest cost for the borrower.
Access to Additional Funds: Many lenders offer top-up personal loans to those transferring their existing personal loans. Thus, personal loan balance transfer facility would benefit existing personal loan borrowers unable to avail top-up personal loans or being charged higher interest rates for it.

Eligibility Criteria for Personal Loan Balance Transfer

The eligibility criteria for personal loan balance transfer may vary depending on the lender’s credit risk policies and the applicant’s credit profile. Below are the general eligibility criteria for personal loan balance transfer considered by most lenders:

Age: 21-65 years
Credit Score: Preferably 750 or above
Repayment Track Record: Clean (No missed EMIs for at least past 1 year)
Employment Type: Salaried individuals and self-employed professionals
Minimum Monthly Income: Rs. 15,000
Employment Stability: Usually 1 year of work experience is required with some lenders requiring longer work experience
Existing outstanding loan amount should be at least Rs. 50,000 or defined by the lender

Documents Required for Transferring Personal Loan

Basic documents that the borrower may be required to submit in case he/she wishes to opt for a personal loan balance transfer are as follows:

Common Documents:

Duly signed application form with passport size photographs
Identity Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
Age Proof (PAN card/driving license/passport/voter ID/Aadhaar Card, etc.)
PAN Card (Mandatory)
Address Proof (Aadhaar Card/Passport/ Landline Bill/ Latest Electricity bill/Rent agreement, etc.)

Additional documents specified to salaried and self-employed individuals are as follows:

For Salaried Individuals:

Last 6 months’ bank statement
Salary slips for last 3 months
Statement of personal loan from a current lender (for the loan that needs to be transferred)

For Self-employed Individuals:

Business PAN card
Business address and vintage proofs
Last 3 years’ Balance sheet along with profit and loss statement pertaining to business
Last 6 months’ bank statement of individual and business entity
Statement of personal loan from a current lender (details of the loan that need to be transferred)

Step-by-Step Process to Transfer Your Personal Loan

Personal loan balance transfer process usually involves the following steps:

Check the current interest rate that you can get on your personal loan with other lenders and calculate the interest savings.
Evaluate the estimated cost of the loan transfer taking into account various charges and fees that might be applicable.
Consider the net benefits and finalize whether you want to opt for the balance transfer or not. Shortlist a few lenders that you may want to transfer your existing loan to.
Compare the interest rates offered by the shortlisted lenders, your loan amount eligibility and their loan process.
After you finalize upon the new lender and decide to go ahead with the transfer, apply for a NOC (No Objection Certificate) and foreclosure letter from your existing lender.
Start the application process with the new lender. Submit the loan documents along with the complete record of repayments.
Get a sanction letter and execute the new loan agreement with the new lender.
Take a disbursement (of the outstanding loan amount that you had to pay to the previous lender) from the new lender through cheque/ demand draft in favour of the earlier lender.
Once the previous lender receives the outstanding loan amount, they will cancel all the cheques and ECS and close your personal loan account.

Calculation of Interest Cost Savings Generated from Personal Loan Balance Transfer

The following table gives you an illustration of how a personal loan balance transfer could help you save on the total interest payable:

Original Loan Amount	Rs. 5 Lakh	Rs. 10 Lakh
Existing Rate of Interest	15% p.a.	15% p.a.
Original Repayment Tenure	60 months	60 months
EMI already paid	12	12
EMI to be paid	48 months	48 months
Existing EMI	Rs. 11,894	Rs. 23,789
Outstanding Loan Amount	Rs. 4,27,416	Rs. 8,54,819
New Rate of Interest	11.50% p.a.	11.50% p.a.
New Tenure	48 months	48 months
New EMI	11,150	22,301
Total Savings	Rs. 35,712	Rs. 71,424

Factors to Consider Before Opting for a Balance Transfer

Before opting for the personal loan balance transfer option, it’s essential to evaluate the following factors to ensure that the transfer is financially beneficial:

Savings in the overall interest cost: The primary reason for opting for a personal loan balance transfer is to reduce the overall interest cost of the loan. As personal loan balance transfer requests are treated as fresh personal loan applications by lenders, they levy processing fee, administrative charges and other standard charges applicable to new personal loan applications. Additionally, borrowers may need to pay nominal charges such as foreclosure charges and transfer fees to the existing lender when opting for this facility. Therefore, it is important to factor in these costs while calculating their overall savings from the balance transfer. Transfer the loan only if the net savings in interest cost is significant enough after considering all the costs involved in doing so.

Residual tenure of the existing personal loan: Personal loan borrowers pay most of their interest component during the earlier stages of the loan tenure, leaving little scope for making interest cost savings through a loan transfer in the later stages. Therefore, unless the primary goal is to significantly reduce the EMI burden, borrowers should try to keep the tenure of their new personal loan – post balance transfer – same as the remaining tenure of their existing personal loan as opting for a longer repayment tenure would result in higher interest cost.

Renegotiating interest rates with existing lenders: As a personal loan balance transfer is considered a fresh loan application by the new lender, the borrower has to undergo the steps and processes associated with a new application, including loan evaluation. As going through all these steps again can be tedious and time-consuming for borrowers, they should first try to renegotiate the ongoing personal loan’s interest rate with the existing lender before switching. They should go ahead with the transfer option only if the existing lender refuses to match the rates offered by other lenders on their outstanding personal loan.

Select and Apply for Personal Loan Amounts of Your Choice
Rs 5 Lakh Personal Loan	Rs 10 Lakh Personal Loan
Rs 3 Lakh Personal Loan	Rs 1 Lakh Personal Loan
Rs 15 Lakh Personal Loan	Rs 50000 Personal Loan

FAQs on Personal Loan Balance Transfer

How to do balance transfer of personal loan?

To transfer your personal loan, start by checking with banks/NBFCs where you already have a relationship, as they may offer lower interest rates to their existing customers with good credit profiles. Look for pre-approved balance transfer offers, which usually have faster processing. You can also visit online financial marketplaces like Paisabazaar to compare rates and loan features from multiple lenders. Once you’ve identified the best offer, ask your current lender to match it. If they decline, proceed with the transfer to the new lender offering lower interest rates and/or better terms.

Which bank is best for personal loan balance transfer?

One that offers the lowest interest rates is the best for making the loan transfer. If your goal is EMI reduction, then your tenure will be important.

How long does the balance transfer process take?

Transferring a personal loan is treated like a fresh personal loan application by the bank, the loan is transferred to. Therefore, it might take 2-4 days’ time for the personal loan to be transferred to the new bank. In case of pre-approved offers, the turnaround time for loan disbursal can be lower.

Who can opt for the balance transfer facility?

Existing personal loan borrowers with good repayment history and credit profile can opt for balance transfer facility.

Can the repayment tenure be changed while opting for the personal loan balance transfer?

Yes, while opting for personal loan balance transfer you can increase or decrease the loan tenure depending on your repayment capacity.

Can I transfer my personal loan to any bank of my choice?

Yes, as long as the new lender accepts your credit profile and outstanding loan terms.

Is it possible to negotiate interest rates during a balance transfer?

Absolutely. If you have a high credit score and/or offers from multiple lenders, you can negotiate better loan terms with your current lender and other banks and NBFCs.

Can I transfer a personal loan taken from an NBFC?

Yes. Most banks and NBFCs accept balance transfers from both banks and NBFCs.

Can I transfer my credit card balance to a personal loan?

Not directly, but you can avail a personal loan to pay off your credit card dues.

Who can avail the personal loan balance transfer facility?

Lenders offer this facility to existing personal loan borrowers of other lenders matching their loan eligibility criteria.

Does personal loan balance transfer affect credit score?

While exercising the personal loan balance transfer option, the new lender would fetch your credit report to check your creditworthiness. As such lender-initiated loan enquiries are considered as hard enquiries, credit bureaus will reduce credit score by a few points for each lender-initiated enquiry. Hence, opting for a personal loan balance transfer option might reduce your credit score by a few points. However, making personal loan balance transfer applications with multiple lenders within a short span can lead to steeper reduction in your credit score.

What is the repayment tenure in case I opt for the balance transfer of my personal loan?

The repayment tenure can range between 12 to 60 months.

Can I avail myself more money by opting for a balance transfer?

Yes, several lenders offer customers the option to avail a top-up personal loan while exercising personal loan balance transfer. Top-up personal loan enables customers to borrow more money over and above their existing loan.

Do I need to submit any collateral or security while applying for a balance transfer?

No, you are not required to submit any collateral or security for applying for a balance transfer, as it is an unsecured loan and the same as personal loan.