Personal Loan Balance Transfer Calculator

Compare the two loans

The tenure trap

Set the new tenure longer than the months remaining and watch the EMI fall dramatically — while total interest goes up. This is how most transfer offers are presented, and it is why so many people transfer a loan, feel relieved for a month, and end up paying more overall.

For an honest comparison, set the new tenure equal to the months left on your current loan. Only then are you comparing the rate, which is the thing you are actually switching for. If you genuinely need a lower monthly outgo, stretch the tenure afterwards, with your eyes open about the cost.

The break-even question

The calculator gives you a break-even in months: how long you must keep the new loan before the monthly saving has repaid what the switch cost. If you plan to close the loan before that point — from a bonus, a maturity, or a windfall — the transfer loses money even at a genuinely better rate.

That is also the case for comparing a transfer against simply prepaying. If you have a lump sum available, putting it against the existing loan often beats moving the whole balance, and costs far less to do. The prepayment calculator works that side out.

When a transfer genuinely makes sense

• The rate gap is two points or more and the new tenure matches what is left on the old loan.
• Your credit score has improved substantially since you borrowed — this is the most common legitimate reason.
• You have a good stretch of loan left. With under a year remaining there is too little interest left to recover the charges.
• The new lender waives the processing fee, which several do to win a transfer. Ask, because it is often available and rarely offered.
• You are consolidating several debts into one, in which case the comparison is broader than rate alone — see debt consolidation.

Questions this page gets asked

How much lower must the new rate be to be worth it?

Usually about two percentage points. Below that the foreclosure charge and the new processing fee tend to eat the entire saving.

What does a balance transfer cost?

Two charges on the outstanding amount, both plus GST: the old lender's foreclosure charge, commonly 2% to 5%, and the new lender's processing fee, commonly 1% to 3%.

Why did my EMI drop so much on the transfer offer?

Very often because the new tenure is longer, not because the rate is much better. Set both tenures the same in the calculator to see the real difference.

Does a balance transfer hurt my credit score?

Slightly and briefly. There is a hard enquiry and a new account, while the old loan closes. It recovers within a few months of clean repayment.

Can I ask my current lender to reduce my rate instead?

Yes, and you should ask first. It costs nothing, involves no charges or paperwork, and lenders often prefer it to losing the account.

Is a top-up loan available when I transfer?

Frequently, and it is how transfers are usually sold. Treat the top-up as a separate borrowing decision, not as part of the saving.

Should I transfer if only a year is left?

Almost never. Too little interest remains to recover the switching charges.

Transfer or prepay — which is better?

If you have a lump sum, prepaying is usually cheaper and simpler. Transfer when the rate gap is wide and you have no lump sum available.

Conclusion

A transfer is worth doing when the rate gap is wide, the tenure stays the same, and you will hold the loan past the break-even point. It is not worth doing for a one-point cut, for a lower EMI produced by a longer term, or with a year left to run.

Make the free call first — ask your existing lender to match the offer. If they will not, run both loans at equal tenure above and switch only on the total, never on the instalment. The wider picture on pricing is on the interest rates page, and what your score is worth on the CIBIL score page.

Related reading