Balance transfer in personal loans: Everything you need to know

  • Published on: 24 Nov 2023
Balance transfer in personal loans: Everything you need to know

A balance transfer in a personal loan is an excellent option to manage your repayment and even save on interest. This facility allows you to transfer your loan balance from one lender to another, which is a feasible solution when a new lender offers a better interest rate than your current one.

However, to make a well-informed decision, you need to know the features and other nuances of a personal loan transfer facility. So, read on to know what balance transfer in a personal loan is, its benefits, process and more. 

What is a personal loan balance transfer?

A personal loan balance transfer is a facility offered by most financial institutions in India. Simply put, this facility allows you to transfer your outstanding loan amount to another lender, who may be offering a better repayment structure. 

When you opt for a balance transfer in a personal loan, your new lender settles your loan with the existing lender. Based on your outstanding loan amount, foreclosure, charges, etc., you can opt for a new loan at a better interest rate and a suitable repayment plan.

Here are some instances when carrying out a transfer of loans is ideal:

  • If your lender is charging very high-interest rates
  • If you want to take a top-up loan to fulfil your cash requirements
  • If you want to extend the tenure and restructure repayment 
  • If you want to consolidate multiple debts into one 

Balance transfer interest rates of top institutions

When comparing various financial institutions, you must check the interest rates and the processing fees to choose the best option. Here are the interest rates and charges of some of the top financial institutions offering a personal loan transfer: 

Financial InstitutionsInterest RatesProcessing Fee
Axis Bank10.49% p.a. onwardsUp to 2% + GST
Aditya Birla Finance13% p.a. onwardsUp to 3% + GST
Bajaj Finserv11% p.a. onwardsUp to 3.93%
HDFC Bank10.5% p.a. onwardsAs per the bank’s policy
ICICI Bank10.50% p.a. onwardsUp to 2.50% + taxes
IDFC First Bank10.49% p.a. onwardsUp to 3.5%
IndusInd Bank10.5% p.a. onwardsUp to 3%
Kotak Mahindra Bank10.99% p.a. onwardsUp to 3% + taxes
Tata Capital10.99% p.a. onwardsAs per the bank’s policy
SMFG India Credit Co. Ltd.11.99% p.a. onwardsUp to 6% of the loan amount

Note that the above interest rates are current as of October 2023 and are subject to change at the financial institution’s discretion.

Eligibility and documents required for a balance transfer 

When you apply for any loan, verifying if you are eligible and keeping the required documents can help save time and effort. While these terms may vary across lenders, here are some general criteria for a balance transfer in a personal loan. 

  • You must be between 21 and 60 years of age
  • Minimum monthly income as per the lender’s policy
  • Minimum of 1-year employment with the current employer 
  • A CIBIL score of 750 or above 

If you meet the above requirement, you can apply for a personal loan balance transfer with the following general documents:

  • Proof of identity such as PAN Card, Aadhaar card, driver’s licence, passport, etc.
  • Proof of address such as an Aadhaar card, utility bills, passport, etc.
  • Proof of income such as last 3 months’ salary slips and 6 months’ bank statement (if salaried individual)
  • Self-employed professionals must provide 3 years’ balance sheet, 6 months’ bank statement

With these points in mind, you can decide when is the right time to opt for transfer of loans. However, ensure that your new overall cost is lower than the existing one. So, do a thorough comparison of the terms. 

If you are looking to get an Instant Cash Loan at pocket-friendly rates, look no further than Fibe. You can get funding of up to ₹5 lakhs at interest rates starting at just 2% per month. Submit minimal documents and enjoy quick approval. Download the Personal Loan App or register on our website to get started. 

FAQs on Personal Loan Balance Transfer

Is balance transfer a good idea for a personal loan?

Transferring your personal loan is a good idea if a new lender offers better interest rates. You can also opt for a balance transfer to restructure your loan by getting a longer tenure to repay, or even apply for additional funds through a top-up. 

How much does a loan transfer cost?

When you opt for a balance transfer, your existing lender will charge a foreclosure fee, which varies from bank to bank. You will also have to pay a processing fee to your new lender. 

Are balance transfers interest free?

No, you must pay the interest and other charges when you transfer your loan. However, the new interest rate may be lower than your existing one.  

Can I transfer my personal loan from one bank to another?

Yes, by applying for a personal loan balance transfer, you can easily switch from one bank to another.


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