What is a Balance Transfer?
A Balance Transfer is the process of transferring your existing loan (like a personal loan or credit card debt) from one lender to another offering better terms, usually a lower interest rateor longer tenure. The main goal is to reduce your EMI burden and save on total interest outgo.
How is Balance Transfer Savings Calculated?
The savings are calculated by comparing your current loan EMI andnew loan EMI after balance transfer, using the EMI formula:
EMI = [P × r × (1 + r)n] ÷ [(1 + r)n – 1]
- P = Outstanding Loan Amount (Principal)
- r = Monthly Interest Rate (new vs old)
- n = Remaining Loan Tenure in Months
The difference between the two EMIs over the loan tenure indicates your potential savings.
Benefits of Using a Balance Transfer Calculator
- Quickly compare your current EMI vs new EMI
- Understand how much interest you can save
- Plan whether transferring your loan is financially beneficial
- Make smarter borrowing decisions with clear estimates
Tips Before Opting for a Balance Transfer
- Check processing fees and ensure savings outweigh costs
- Opt for transfer early in the loan tenure for maximum benefit
- Compare multiple lenders for the best interest rates
- Review your credit score to secure the best offers
Conclusion
A Balance Transfer Calculator is a smart tool to evaluate whether switching lenders will actually save you money. It shows the new EMI, interest savings, and overall financial benefit, helping you make an informed decision before applying.