Compare the existing and proposed loan using the same outstanding principal and same target payoff date. Otherwise a longer new tenure can manufacture a lower EMI while increasing total interest.
Calculate break-even first
| Switching cost | Include |
|---|---|
| New lender fees | Processing, legal, valuation, documentation where applicable |
| Old lender exit costs | Contractual charges, document retrieval, other applicable costs |
| Forex cost | Any currency conversion needed during transfer/disbursement |
| Operational cost | Temporary double payments or cash gaps |
Then estimate realistic monthly interest saving under the same remaining term. Break-even months = total switching cost ÷ monthly saving. If you expect to prepay or refinance again before break-even, the transfer is weak.
Study-period and moratorium treatment can dominate the rate difference
Check whether accrued interest is capitalised, when EMI begins, and how any remaining moratorium is treated after transfer. A lower nominal rate with a longer period of capitalisation can still produce a higher opening repayment balance.
Foreign-study loans need a currency check
If future tuition disbursements remain in foreign currency, compare each lender’s forex process and spread. Do not mix savings on the transferred INR debt with a separate future USD/GBP exposure.
Verify collateral and document movement
For secured loans, document how original security/property records move between lenders and what conditions must be satisfied before the old facility closes. Do not assume the new sanction automatically settles the old loan on the same day.
Use PM‑Vidyalaxmi where relevant for education-loan comparison, but the actual sanction and takeover terms control. Decision rule: transfer only when total savings after all costs remain positive under the same payoff horizon and a downside rate/forex scenario.