Personal Loan Balance Transfer Lowest Interest Rate

What if we told you that if you have personal loans with high interest rates, you could pay them off more easily with a balance transfer of personal loans.

In 2025, banks and financial institutions in India are offering the best interest rates so that they can aid in reducing your monthly EMI and overall loan burden. In this blog, we are going to tell you how you can reap the benefits of the lowest interest rates this year.

What Is the Balance Transfer of a Personal Loan?

A personal loan balance transfer lets you move your existing personal loan from one lender to another, usually to avail a lower interest rate. As a result, the new lender’s terms can allow for lower monthly EMIs, a shorter loan period, or even a combination of both, leading to better overall financial relief.

Why consider a Balance Transfer?

• Minimise Interest Costs: Getting an interest rate that’s lower than your current one can reduce your overall repayment amount.
• Lower EMIs: Your financial burden would ease with lower monthly payments due to a reduced interest rate.
• Debt Consolidation: Multiple loans can be combined into one, which is easier to manage.

Banks/NBFCs Offering Personal Loan Balance Transfer Lowest Interest Rate in 2025

Banks offering personal loan balance transfer lowest interest rate in 2025

NBFCs offering Personal Loan Balance Transfer Lowest Interest Rate in 2025

Tips to Qualify for the Lowest Personal Loan Balance Transfer Rate

In order to get personal loan balance transfer lowest interest rate, you should consider the following tips that will greatly aid in securing the balance transfer loan at the lowest rates:

1. Maintain an Impressive CIBIL (750+): A healthy credit score signals that you’re a responsible debtor capable of repaying your debts promptly. Ensure your CIBIL score is above 750 to get a lower interest rate.

2. Have a Stable and Sufficient Income: Financial institutions want to verify that you will meet your EMI payments on time. Having a consistent income stream, be it from employment or a business, allows you to access preferential rates. The greater and more consistent your earnings, the stronger the assurance banks have regarding your ability to repay.

3. Keep Your Debt-to-Income Ratio (FOIR) Low: The FOIR (Fixed Obligation to Income Ratio) represents the portion of your income that has been set aside in context to your existing debts. A lower FOIR means lesser debts and higher savings, which increases your chances of securing a loan at a better interest rate and vise-versa.

4. Ensure a Positive Repayment History: Prior to approving your loan application, banks evaluate the credit history of your former loans. The absence of any loan defaults increases your chances of getting approved at a better rate since it implies that you are a trustworthy borrower.

5. Make Use of an Existing Banking Relationship: Having an active savings or current account with the lending bank is an advantage. Because your financial history is easier to verify, banks are more willing to offer lower rates to their existing customers.

Benefits of a Personal Loan Balance Transfer

Taking out a new loan at a different bank or NBFC as a personal loan balance transfer at the lowest interest rate can bring a variety of benefits. Below are the key benefits:

1. Reduced EMIs and Interest Expense: The greatest advantage of a balance transfer is financial savings. When you transfer your loan to a lender offering a lower interest rate, your monthly EMI decreases, and the total interest payable reduces. This leads to greater savings in the future.

2. Avail a Top-up Loan: In addition to the balance transfer, banks and NBFCs can provide an extra top-up loan. This can be an extra loan for personal requirements such as home renovation, education, or medical treatment, which doesn’t require a fresh loan.

3. Financing Options that Adapt to Your Needs: With a balance transfer, you also get the option to change your loan tenure to better suit your requirements. For smaller EMIs, you can increase your tenure. On the other hand, if you wish to close your loan at the earliest, you can choose a shorter tenure. This kind of flexibility goes a long way in improving financial planning.

4. A Smoother Loan Process: Moving your personal loan to a new lender means you can avail of a number of new benefits. Not only can you get enhanced customer support and quicker loan processing, but also improve online account management. It is a time-saving method because many financial institutions allow personal loan balance transfers online.

Mistakes to Avoid in a Personal Loan Balance Transfer

While transferring your loan can save money, some mistakes may reduce your benefits. Here’s what you should avoid:

1. Not Verifying Foreclosure Penalties on Your Current Loan: A high early closure penalty by your current bank can negate the advantage of a lower interest rate. Before applying for a transfer, be sure to check the prepayment or foreclosure charges.

2. Selecting a Longer Tenure Without Calculating Costs: When you take a longer tenure, your monthly EMI reduces, but the total interest you pay over time increases. You might lose out on savings by extending your loan too much. Decide only after doing the calculations.

3. Not Checking Offers from Different Banks and NBFCs: Many people transfer their loans without looking at other offers. Every lender has different policies when it comes to repayment, eligibility, and processing fees. Looking at different lenders helps you get the best personal loan balance transfer offer at the lowest interest rate.

4. Overlooking Additional Costs: Certain lenders include additional fees like administration fees, stamp duties, or documentation fees. Such fees tend to be hidden and would increase your total repayment cost. Make it a point to thoroughly read all the terms before agreeing.

Step-by-Step Personal Loan Balance Transfer Process

At first glance, shifting your personal loan to a different bank or NBFC might seem challenging, but if you stick to the provided guidelines, the steps to complete the task are fairly straightforward. These are as follows:

Step 1: Evaluate Your Eligibility

• Every lender has its own eligibility criteria, which might include age, salary, CIBIL score, and repayment history.
• Make sure you fit all these conditions before applying. 
• Most banks look for a 700-750 CIBIL score and a steady income.

Step 2: Compare Interest Rates And Fees

• Make sure you look at all the lenders' personal loan balance transfer interest rates.
• Along with interest rates, also check the processing fees and any foreclosure or other hidden charges.
• Low fees with a slightly higher interest rate may turn out to be cheaper as compared to a very low rate with high fees.

Step 3: Request a Foreclosure Letter From Your Current Lender

• Notify your current financing institution that you intend to pay off your loan using a balance transfer and close the account.
• They will issue a foreclosure letter and a statement indicating the outstanding loan amount.
• This document is crucial, as the new lender requires it to settle your previous loan.

Step 4: Submit Application to the New Lender

• Complete the application for a balance transfer either at the bank’s branch or through their online portal if available.
• Provide all the necessary documentation, such as: 
  • KYC documents (ID and address proof)
  • Income proof (salary slips, ITR, bank statements) 
  • Existing loan statement and foreclosure letter

Step 5: Verification and Approval

• The new financial institution will verify your credit history, repayment ability, and relevant documentation.
• Upon satisfactory compliance with all requirements, they will sanction the balance transfer.

Step 6: Payment to Old Lender

• Upon approval, the new institution settles your outstanding loan balance with the former bank.
• Following this transaction, your old loan account is terminated.

Step 7: Begin Repayment with New Lender

• At the agreed and sanctioned personal loan balance transfer lowest interest rate, you now start repaying to the new bank.
• Ensure to retain any documentation of closure received from the old lender for your records.

Wrapping-Up

One of the best methods to manage your monthly expenses and set aside some savings is to opt for a personal loan balance transfer. However, before proceeding, you should perform a cost-benefit analysis by comparing the interest, the service and the processing fees of various loan providers, and calculate your total savings with their loan offers. Keep in mind that a balance transfer offer is really beneficial if your current interest rate is significantly higher, and you have more than a year left to repay it.

My Mudra guides you through the best personal loan balance transfer interest rate options. We have tie-ups with 90+ banks and NBFCs, allowing you to compare their loan deals instantly, and apply for a personal loan balance transfer with a few clicks. We serve as your reliable partner in securing the best personal loan bank loan transfer at the lowest price.

Also Read:
- Check Eligibility to Transfer Personal Loan Balance Online
- Top Reasons Millennials in India Prefer Personal Loans in 2025