⏩ Loan Prepayment Calculator
See how much interest you save and how much sooner you finish your loan with prepayments.
Frequently Asked Questions
How do I use the Loan Prepayment Calculator?
Enter your Loan Amount, Interest Rate and Loan Tenure, then add a One-Time Lump Sum Prepayment (and the month it's applied) and/or an Extra Monthly EMI Amount, and click Calculate Savings to see the total interest saved, the original vs new tenure, and a year-by-year balance comparison chart.
Does prepayment reduce my EMI or my tenure?
This calculator keeps your original EMI amount fixed and applies the prepayment (lump sum and/or extra monthly amount) entirely towards reducing the outstanding principal — which shortens your loan tenure. Most borrowers prefer this approach because it maximises interest savings. Some lenders also offer the option to reduce your EMI instead while keeping the tenure the same, but that saves less interest overall.
Why does prepaying early save more interest than prepaying later?
In a reducing-balance loan, interest is calculated on the outstanding principal each month. Prepaying early removes a chunk of principal while a much larger number of remaining EMIs would otherwise have accrued interest on it. The same prepayment amount made closer to the end of the loan removes less accumulated future interest because fewer EMIs remain.
Are there any charges for loan prepayment?
As per RBI guidelines, banks and NBFCs cannot charge foreclosure or prepayment penalties on floating-rate home loans taken by individual borrowers. However, fixed-rate loans, personal loans, and loans to non-individuals may still attract prepayment charges (often 2–5% of the prepaid amount) — always check your specific loan agreement.
Is it better to prepay my loan or invest the money instead?
It depends on your loan's interest rate versus the expected return on investment. If your loan rate is higher than what you can reliably earn after tax elsewhere, prepayment is usually the safer, guaranteed "return." If your investment can reliably outperform the loan rate, investing may build more wealth — but it carries market risk that a guaranteed interest saving does not. Compare this tool's interest saved against our SIP Calculator or Lumpsum Calculator projections.
Can I combine a lump sum prepayment with extra monthly EMI?
Yes — this calculator supports both simultaneously. The extra monthly amount is applied to principal every month from month 1, and the one-time lump sum is applied additionally at the month you specify. Combining both typically gives the largest interest savings and tenure reduction.
What happens if my lump sum is larger than the outstanding balance?
The calculator caps the lump sum applied in any month at the current outstanding balance — it will never push the balance below zero. If your lump sum fully clears the loan at that point, the new tenure simply ends at that month and no further EMIs or interest are counted.
Why does the calculator stop simulating after a certain number of months?
As a safeguard, the simulation runs for at most three times your original tenure in months. This is far more than enough for any realistic combination of prepayments to close the loan, and simply prevents an infinite loop if extreme inputs (e.g. an extra EMI larger than the interest portion) were ever entered.