Personal Loan Balance Transfer
Move your personal loan to a lower rate — when it saves money, what it costs, and how to do it.
Updated 30 September 2026 · 8 lenders trackedWhat you need to know
In a balance transfer the new lender pays off your old loan and you repay the new lender at a lower rate. Because most personal loans are fixed-rate, the old lender can charge its foreclosure fee (2% – 5% + GST at many banks), and the new lender charges a processing fee — so the saving must exceed both.
Is it worth it?
| Rate change | EMI saving / month | Interest saved over 48 months | Switching cost | Net gain |
|---|---|---|---|---|
| 18.00% → 12.00% | ₹1,521 | ₹72,988 | ₹32,450 | ₹40,538 |
| 16.00% → 12.00% | ₹1,003 | ₹48,155 | ₹32,450 | ₹15,705 |
| 15.00% → 12.00% | ₹748 | ₹35,926 | ₹32,450 | ₹3,476 |
| 14.00% → 12.00% | ₹496 | ₹23,823 | ₹32,450 | -₹8,627 |
| 13.00% → 12.00% | ₹247 | ₹11,848 | ₹32,450 | -₹20,602 |
₹5,00,000 outstanding, 48 months left. Switching cost = 4% foreclosure charge at the old bank + 1.5% processing fee at the new one, both with 18% GST. With a zero-foreclosure loan (e.g. IDFC FIRST, or any floating-rate loan) the cost falls to about ₹8,850.
Steps
- Ask your lender firstRequest a rate reduction — it avoids all switching costs.
- Get a foreclosure statementOutstanding principal, interest to date and charges.
- Apply to the new lenderShare the foreclosure letter and repayment track record.
- ClosureNew lender pays the old one; collect the closure letter / NOC.
- Check your credit reportEnsure the old loan shows as closed within a few weeks.
Foreclosure terms by lender
| Lender | Processing fee | Prepayment / foreclosure |
|---|---|---|
| Axis Bank Personal Loan | Up to 2% of loan + GST | Foreclosure 5% + GST; part-payment 3% or 2% depending on tenure (BankBazaar) |
| HDFC Bank Personal Loan | Up to ₹6,500 + GST | Foreclosure: 4% of principal outstanding up to 24 EMIs, 3% from 25 to 36 EMIs, 2% after 36 EMIs (+ GST) |
| ICICI Bank Personal Loan | Up to 2% of loan + GST | Foreclosure and part-payment: 3% of principal outstanding if the loan is up to 24 months old; nil after 24 EMIs |
| IDFC FIRST Bank Personal Loan (FIRSTmoney) | 0% – 3.5% of loan (incl. GST); zero on select amounts | Zero foreclosure charges |
| SBI Personal Loan (Xpress Credit) | 1.50% of loan (min ₹1,000, max ₹15,000) + GST | SBI’s RTXC page lists no prepayment penalty, but aggregators report 3% of the amount prepaid on fixed-rate Xpress Credit — confirm in your KFS |
| Bank of Baroda Personal Loan | Nil for government employees with BoB salary account; others 1% – 2% + GST (min ₹1,000, max ₹10,000) | Zero prepayment charges (ClearTax); the official page is silent. On the floating-rate option RBI rules bar prepayment charges anyway |
| YES Bank Personal Loan | Up to 2.5% of loan | Foreclosure up to 4% of outstanding principal; part-prepayment allowed after 12 EMIs |
| Kotak Mahindra Bank Personal Loan | Up to 5% of loan + GST | Foreclosure 5% of outstanding principal + GST (BankBazaar) |
Balance transfer calculator
Frequently asked questions
Can I get a top-up with a balance transfer?
Many lenders offer extra funds on a transfer. Borrow it only if you need it — it adds to EMI and interest.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.