Best Banks for Personal Loan Balance Transfer in 2025

Published: 19 September 2025

Updated: 21 September 2025

Balancing a number of personal loans can be a headache, and if managed ineffectively, it can cost you a fortune in the long term because of their high interest rates. Personal loan balance transfers provide an opportunity to consolidate high-interest loans into a new loan with a lower interest rate. It is no wonder that most borrowers ask: "Which bank is best for personal loan balance transfer?" The answer is not straightforward as it depends on the interest rates, processing fees, repayment terms, and customer service.

In this blog, we will discuss personal loan balance transfer in detail, cover the reasons why people opt for it, and provide a comparison of the best banks for personal loan balance transfers in India.

Why Should You Consider a Balance Transfer Loan?

Asking which bank offers the best personal loan balance transfer is the last thing one should do. It is essential to understand why people look for balance transfers. Here are the primary advantages:

Reduced Interest Rate: Paying less interest on the loan amount is the biggest advantage, which means your EMIs come down.
Flexible Tenure: The repayment period can be lengthened or shortened based on your preference at the time of repayment.
Top-Up Loan Option: A few banks give you the option of taking additional funds with the transfer.
Better Credit Score: An improved credit history can result from on-time payments made regularly, especially with better payment terms.
Lower Monthly EMI: The monthly EMI is lower due to better terms, as well as lower interest rates.

An illustration of how a balance transfer can work to your advantage is when you have a personal loan with an interest rate of 14%, but another bank offers one at 10%. Instead of carrying a personal loan with a higher interest rate, you could opt to transfer your loan to the bank offering the 10% interest rate, and save money on EMIs and the total interest amount to be paid.

Things to Check Before a Personal Loan Balance Transfer

There will be particular areas that demand your attention before deciding to transfer your personal loan. Here are a few fundamental issues that you must consider:

Serving Duration: Even a minute extension to the loan repayment period matters. If your loan is nearly complete, then your repayment balance will automatically be small. Therefore, transferring your loan to repay small amounts will cost you more than you save in interest payments.
Processing Fees: Almost every bank applies a processing fee for loan transfers. This could be a set fee or a percentage of the loan amount. Do a quick calculation of your savings after factoring in the processing fee. If the fee outweighs the savings, then there is no point in transferring.
Prepayment Charges: Your previous financial institution might apply a fee for closing your earlier loan prematurely. This fee is known as a 'prepayment fee' or 'foreclosure fee'. Always verify with your previous institution for any such fees and include them in your computations. If you do not, there is a risk that you could pay higher fees than the amount you save.
Eligibility Requirements: The process for transfer approvals depends on the institutions, and they might look into your income, the stability of your employment, as well as your credit score. If your credit score is poor or if you have a history of skipping EMI payments, then the transfer request may be denied or a higher interest rate may be offered. Hence, your credit score and repayment history, as well as your documents, should be in proper shape before you make the application.

How to Decide the Best Bank for Your Balance Transfer Loan?

Deciding which bank offers the best loan balance transfer depends entirely on your personal finances. Consider the following tips in order to make an informed decision:

Compare Interest Rates: Calculate the interest rates of different banks. Even slight variations can result in significant savings over the loan period.
Check Processing Fees and Prepayment Charges: Your existing bank may charge you a processing fee for your loan transfer, and the new bank may impose a prepayment charge. Always factor these fees in while calculating your overall savings so that your savings don’t get swallowed up by these lesser-known fees.
Assess the Remaining Tenure: If your loan is nearing completion, there’s little to no benefit in the transfer. Balance transfers are most beneficial when the repayment period has a few years left.
Search for a Top-Up Option: If you’re in need of additional funds alongside the transfer, verify whether the new bank offers top-up loans. This enables you to deal with other expenses without having to secure an additional loan.
Check Your Credit Score: A favourable credit score, often above 700, will enable you to receive discounts and lower interest rates. Ensure that your credit report is in good shape before submitting the application.

Comparison Table of Top Banks for Personal Loan Balance/Takeover

Here's a comparative table of the best banks for personal-loan balance-transfer/takeover according to recent data.

Bank Name	Interest Rate	Processing Fee	Prepayment / Foreclosure Charges	Key Features
HDFC Bank	10.50% p.a. To 24.00% p.a.	Up to ₹6,500 + GST (1-3% or fixed maximum)	Prepayment of a part of the amount is allowed; charges vary depending on the number of EMIs paid (for example, after a year, the charge is less; after 36 months, it is even lesser). Full prepayment / foreclosure: same scale of 2-4% depending on outstanding and loan seasoning.	Flexible tenure, max up to ~60-72 months; Part-payment & Foreclosure facility; Min/Max Loan Amount varies; Various offers/rate discounts available depending upon profile etc.
ICICI Bank	10.80 % pa to 16.65% p.a. (for balance transfer)	0.5%-2% + GST or fixed fees depends on the loan amount/profile	Foreclosure/prepayment allowed; there is a discount/no charge if foreclosure takes place after payment of 12 EMIs in most of the cases. Such charges are usually 3% of outstanding principal plus taxes, if done before.	No collateral; flexible tenure; minimal documentation; sometimes a top-up from a regular personal loan is available, or balance-transfer could be considered
Kotak Mahindra Bank	10.99% pa onwards	Up to 5 % of loan amount + applicable taxes	Most public documents did not clarify the prepayment/foreclosure charges applied. Are such monies 2% to 5% of the unpaid amount depending on the seasoning? (Needs to be checked with the bank for a specific case.)	The top-up loan facility can be availed while on a balance transfer with flexible tenure options.
Axis Bank	11.25% p.a. onwards (balance transfer)	1.5-2% + GST in many offers	An understanding of prepayment charges and foreclosure details in accordance with the bank, as in a "loan seasoning" (how many EMIs have been paid), is necessary. Mostly, these charges apply only if the prepayment is made before a certain number of EMIs.	Top-up on personal loan, balance transfer option, flexible repayment, online application.
State Bank of India (SBI)	11.15% to ~ 14.30% p.a. for balance transfer (depending on profile and loan amount)	fee up to ~ 1.5% of loan amount; specific minima/maxima (e.g. ₹1,000 min, ₹15,000 max)	Prepayment/foreclosure charges: In many of the SBI personal loan cases, the interest comes with a prepayment charge of roughly 2% of the prepaid amount (whether the full amount or part of it is prepaid). Waivers may be granted under certain conditions such as category/prior time of EMIs paid.	Widely available, large network, flexible tenures up to 84 months, usually competitive for large loan amounts; some offers with reduced processing fees for high credit scores.

Wrapping-Up

A personal loan balance transfer can be a smart approach to lessen your EMI payments and save money on interest charges. Transferring the personal loan to a bank that offers better terms would enable you to manage your finances optimally and enjoy more flexible repayment terms. Prior to opting for a balance transfer loan, make sure to compare the interest rates, check the processing fee, and look at the dues remaining on your loan.

At Mudra, our objective is to support our clients in the decision-making process for their finances. Once equipped with the right information, you can choose the optimal balance transfer personal loan and steer your finances in a positive direction.

Also Read:
- Check Eligibility to Transfer Personal Loan Balance Online
- Personal Loan Balance Transfer Lowest Interest Rate

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Anjali Singh Assistant Manager

Hey there, I'm Anjali Singh. With over 6 years of experience in finance, I specialize in creating content on banking, loans, and financial planning. My goal is to simplify complex financial topics and help readers make informed decisions through my articles.