Personal Loan

Is Balance Transfer A Good Idea For A Personal Loan?


These days you can avail of a personal loan instantly. But repaying it may be more complex than taking a loan, especially if you’re repaying more than one loan simultaneously. Frequent phone calls from the loan provider and the regular visits of recovery agents are every borrower’s nightmare. If you’re going through such a difficult situation, then a personal loan balance transfer is your solution. Let’s check what balance transfer is and how you can take advantage of it.

Personal Loan Balance Transfer

The personal loan balance transfer allows you to move your outstanding balance to a new loan from another provider. Usually, the new loan will carry a lower interest rate. Here, the outstanding loan balance means the balance amount of the loan that you have yet to repay to your loan provider. 

The main benefit of a personal loan balance transfer is that it helps you manage your EMIs better by combining the outstanding amount of your multiple loans and bringing them under one loan.

Advantages of Personal Loan Balance Transfer

The key advantages of transferring the outstanding balances of your loans to another one are:

  • Low EMI burden: After moving the outstanding balance of your existing loans to a new one, your EMI will reduce as the new loan’s interest rate will be lower. Therefore, you’ll feel less financial burden. As you start paying less on EMI, you may find some money left for saving each month. With this amount, you can save little by little for other goals, such as your child’s higher studies. 
  • Long repayment term: While doing the personal loan balance transfer, your new loan provider will give you a choice to increase or reduce the loan term. You can choose according to your wish. If you extend the repayment period, your EMI burden will decrease, leaving you with enough funds to meet your other needs. It’ll reduce your chance of taking further debt.
  • Additional loan facility: Most personal loan providers offer a top-up facility along with the balance transfer. A top-up facility allows you to borrow more money from the loan provider at a lower interest rate. The top-up facility is a blessing for those with an immediate credit requirement. To avail of this benefit, you don’t need to provide any collateral. There are no restrictions to the end-use of the loan amount, i.e., you can use the amount as per your needs and wish.
  • Better management of loans: Managing multiple loans is like handling a mess. Bringing them under one umbrella will help you to track various elements of the loan, like updates on interest rates, EMI repayment dates, outstanding amounts, etc., with ease.
  • Other benefits: As you start paying the EMI regularly on time, your CIBIL score will also improve. CIBIL score is a 3-digit number that shows your creditworthiness. This score indicates how credible you’re in financial matters. It also tells whether you’ll be able to repay the debts on time. If you have a good CIBIL score, you’ll get loans at a lower interest in future across all loan types.

Additionally, many loan providers offer zero processing fees, waiver of the last EMI, etc., with the personal loan balance transfer

Factors to Consider While Doing Personal Loan Balance Transfer

While finalising the lender for the personal loan balance transfer, check the following factors:

  • Before going for a personal loan balance transfer, check how much you can save in interest every month. For this, you can take the help of a personal loan balance transfer calculator. This free tool is readily available on the internet.
  • Check whether there is any foreclosure charge associated with your existing loan. The foreclosure charge is the amount you need to pay when you close the loan before the loan tenure.
  • Check the processing fees for the new loan.
  • Read all terms and conditions of the balance transfer. It helps you to know all details about the transfer thoroughly and know if there is any hidden cost associated with it.

Who is Eligible for a Personal Loan Balance Transfer

A personal loan balance transfer has several benefits, but it’s only available to some borrowers. Loan providers consider the following factors before extending the facility to you:

  • You must be a salaried employee working in any of the following:
  • Private/public sector
  • Partnership firm
  • MNC
  • Government institution
  • Proprietorship business 
  • Your minimum salary must be ₹ 25,000 per month.
  • You should have worked for at least 6 months with your current employer.
  • Your age should be between 25 and 60.
  • Though it’s optional, a decent CIBIL score will help to accelerate the transfer process.
  • The minimum loan balance requirement varies from one loan provider to another, but most providers ask for a minimum balance of ₹ 50,000. 

Documents Necessary for a Personal Loan Balance Transfer

You must produce the following documents for your personal loan balance transfer.

  • Statement of the loan you’re planning to transfer
  • PAN Card
  • Address and identity proofs
  • The recent salary slip
  • Bank statement for the last 3 months
  • If you have a co-applicant, then all the above documents of that person.


The personal loan balance transfer is a suitable method to decrease your debt burden as it helps to reduce your EMI. Also, it allows you to adjust the tenure of the loan according to your comfort so that you can repay the loan regularly without failure. As a result, you can come out of the debt burden soon and will be able to meet all your financial needs without borrowing further.

While going for a personal loan balance transfer, always select a reputed loan provider like Piramal Finance. It ensures better service and competitive interest rates. You can avail of personal loans from Piramal Finance at zero prepayment and pocket-friendly EMIs.