A loan balance transfer allows you to move your outstanding loan from one lender to another that offers a lower interest rate. This helps reduce your EMI or total interest outgo, saving you money over the remaining tenure of your loan.
A loan balance transfer allows you to move your outstanding loan from one lender to another that offers a lower interest rate. This helps reduce your EMI or total interest outgo, saving you money over the remaining tenure of your loan.
Yes, most lenders charge a processing fee (usually 0.5%–1% of the outstanding balance) and your existing lender may levy a foreclosure or prepayment penalty. Always compare these charges against your potential savings before transferring.
A balance transfer is most beneficial when the interest rate difference is at least 1.5%–2%, you have a substantial remaining tenure (5+ years), and the total savings exceed the transfer charges. The earlier in the loan tenure you transfer, the greater the savings.
A balance transfer itself does not negatively impact your credit score. The new lender will perform a hard inquiry, which may cause a minor temporary dip. However, consistently paying lower EMIs on time can improve your credit health in the long run.