Balance Transfer vs Continuing Existing Loan (2026)
Refinancing a high-interest personal loan or home loan reduces monthly EMIs and overall interest burden.
| Parameter | Existing Loan | Balance Transfer |
|---|---|---|
| Interest Rate | Higher (16.0% - 20.0%) | Lower (10.5% - 12.0%) |
| One-Time Fee | Nil (Already Paid) | 0.5% - 2.0% + GST |
| Top-Up Loan Facility | Subject to eligibility | Available at transfer rate |
Benefits of Personal Loan Balance Transfer
- Interest Rate Reduction: Transfer existing high-cost personal loans (16-18%) to a new lender offering 10.5-12.0%, cutting total interest.
- Top-Up Loan Facility: Access additional low-cost top-up capital for personal or emergency expenses.
Net Savings Calculation (After Processing & Foreclosure Fees)
- Break-even Analysis: Ensure net interest savings exceed foreclosure charges (2-4%) on current loan + processing fee (1%) on new loan.
- Remaining Tenure Factor: Balance transfers yield maximum savings when executed in the first half of loan tenure.
Balance Transfer Threshold
Only proceed with a balance transfer if the interest rate differential is at least 1.5% - 2.0% lower and remaining tenure is more than 18 months.