Want to reduce interest rate on your outstanding personal loan by 2 percentage points? And, on top of it, want an additional loan at the reduced interest rate?

If yes, there's an offer for the taking. Interest burden can be reduced not only on the outstanding amount, but also on an additional loan.

All you need to have is a good past payment history. A borrower can not only save on interest on the existing loan, but also can fetch a personal loan at an interest up to 2 percentage points lower than on your existing borrowing.

If one has paid EMIs for nine months and still have to pay EMIs for 15 more months against a loan of Rs 200,000, a 2 percentage points lower interest rate can help reduce interest outgo by about Rs 3,500 on the outstanding principal of about Rs 140,000.

And also have an additional loan up to the principal amount paid (in this case Rs 60,000) at an interest rate, which will be lower by 2 percentage points. This is possible via Citibank's "Refill Ready Cash", which offers a flat 2 percentage point cut in interest rate for existing personal loan customers.

Citibank says this is the bank's way of rewarding existing customers with good track record through better interest rates and zero processing fee. HDFC Bank [Get Quote] too offers similar benefits to its existing customers.

Through its "Top Up Loan" facility, it is offering a rebate of 1 to 2 percentage point in interest rate and 50 per cent less processing fee on the additional loan. Individuals need to follow a certain drill to improve their creditworthiness. The useful steps include:

Immediately establish a budget in order to control cash outflows.

Ensure income level permits an additional monthly outflow to service a loan.

Always pay on time.

HDFC Bank employs behavioural scoring for collection purposes. Behaviourial scoring provides indications to the bank when to chase a borrower for payments, says the bank's vice president, retail lending, S Ramakrishnan.

The bank lends to individuals equivalent to 10 to 11 times their net income.

Citibank believes its loan refill offer in no way encourages indebtedness, as it is accessible only to experienced customers who have a good track record of paying back.