Loan Balance Transfer Calculator
Moving a loan to a lower rate: the EMI and interest both ways, net of the transfer fee, and when the fee is earned back.
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Moving saves ₹49,044 over 5 years after the fee, which is earned back in 11 months.
- EMI now₹21,742
- EMI after the transfer₹20,758
- Transfer fee₹10,000
- Fee earned back in11 months
How this is worked out
- EMI = P × i × (1 + i)^n ÷ ((1 + i)^n − 1) at each rate, for the same months left.
- Net saving = interest now − interest after − the fee. The fee is earned back when the lower EMIs add up to it.
Assumptions
- The fee is paid upfront. Legal, valuation and stamp charges vary by lender; ask for every charge in the key fact statement first.
- Rates on floating loans move; this compares today's rates.
The formula
EMI = P × i × (1 + i)^n ÷ ((1 + i)^n − 1)
Net saving = interest now − interest after the transfer − fee
- P: the loan still owed
- i: the monthly rate
- n: the months left
The fee is earned back once the lower EMIs add up to it.
A worked example
Owing ₹10,00,000 with 60 months left, moving from 11% to 9% with a 1% fee changes the EMI from ₹21,742 to ₹20,758 and saves ₹49,044 overall.
Questions people ask
When is a loan balance transfer worth it?
When the interest you save over the months left is more than every charge for moving: processing fee, legal and valuation fees, and stamp duty on the new agreement. A small rate gap on a loan with few months left is rarely worth it.
What should I check before a balance transfer?
Ask the new lender for the key fact statement, which lists the rate, every fee and the total cost. Also ask your current lender whether it will lower your rate; many do for good borrowers.
Does a balance transfer affect my credit score?
The new lender checks your credit report, which is recorded as an enquiry, and the old loan shows as closed. Paying the new loan on time matters far more over time.
From the Savingy Guide
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Sources
Estimates are for illustration only and assume constant returns. Actual returns vary with market conditions. This is not investment advice.