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Personal Loan Balance Transfer - Interest Rate & Charges

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Created on
May 9, 2023


What’s Inside

Personal loans are a practical way to manage financial constraints. But people availing of loans can sometimes find it challenging to pay the EMIs. This situation can occasionally be due to a high-interest rate, leading to higher EMIs. One way of dealing efficiently in such circumstances is by opting for a balance transfer loan.

Even with the existence of such a mechanism, most individuals are still oblivious to its benefits. If you are looking for more details about personal loan transfer, stay tuned as we explore its various facts.

What is Personal Loan Balance Transfer?

In its very essence, a loan transfer is a process of shifting from one loan provider to another. This happens when borrowers move their outstanding loan balance to another lender offering a lower interest rate. A borrower may do this to reduce their current cost of borrowing and switch to a lower interest rate.

The new lender now settles the old loan balance for the borrower while providing a new loan with a lower interest rate. Owing to this lower rate, borrowers can save significantly more on their EMI payments.

Charges for Personal Loan Balance Transfer

If your loan was on a fixed interest rate basis, the lender might charge you a foreclosure fee of up to 5% of the existing loan amount. But if your current loan is on a floating rate basis, no additional foreclosure charges would be applicable.

Further, the new lender can charge you a loan processing fee of INR 500 or up to 4% of your existing loan balance. In every case, you must clarify the applicable charges before zeroing in on a lender.

Benefits of a Personal Loan Balance Transfer

As someone paying a high EMI rate, opting for a personal loan balance transfer can benefit you in the following ways:

  • Reduced Interest Rate: A significant benefit of opting for a loan transfer is the possibility of gaining a lower interest rate.
  • Extended Repayment Tenure: A longer loan repayment tenure can help you save more on your EMI than your existing one. It is significant to note that a longer duration can mean a higher interest.
  • Top-up benefits: Besides closing your existing loan, some lenders also allow you to top-up and borrow a higher amount.
  • Better Loan Terms: Careful selection and negotiation can help you obtain loans at the terms that suit your requirements best.
  • Loan Consolidation: Tracking and paying multiple EMIs can be tedious. A personal loan transfer can help consolidate all your EMIs and switch to a single lender.
  • Credit Score: Lower EMI can also mean easier management of repayments, thereby ensuring a better credit score.

With several benefits, a personal loan transfer can help augment your cash flow and manage EMIs more effectively. Let's now look at a few factors you must remember before opting for a transfer.

Balance Transfer Loan: Factors to Consider

A few aspects that can help you decide on a loan transfer are:

Loan Tenure

Select a tenure that best meets your objectives. Also, if there are a few months left before your current loan's closure, a loan transfer may not be the best idea.

Loan Amount

While considering a loan amount, verify the charges and interest rates applicable across different vendors for different amounts.

Processing Fee and Foreclosure Charges

Ensure you verify the processing charges and foreclosure fees across multiple lenders to arrive at the best deal.


A balance transfer loan provides a practical way to manage your EMI payments while enhancing your credit score. But before you opt for one, you must consider all aspects, such as the lender, tenure, charges, etc., to find the best fit.

Get instant loans directly to your Savings Account through the Fi Money app. With Fi's paperless process, users can benefit from competitive interest rates and complete control over all loan details. Further, automatic in-app payments can also help avoid late EMI fees.

Frequently Asked Questions

1. What are the charges for a loan takeover?

The charges for loan takeover can differ between vendors and also on your present loan's characteristics.

2. Is a balance transfer of loan a good idea?

A loan transfer can help you manage your finances if carefully planned


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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