Loan Prepayment Calculator
This is an education and retention tool — no affiliate offers here, just the math.
Prepaying means paying more than your scheduled EMI toward the principal. Interest is charged on the outstanding balance, so every rupee of principal you clear early stops earning interest for the rest of the loan. And because early EMIs are mostly interest, prepaying early saves the most. After a part-prepayment, lenders usually offer two choices, both calculated here: keep the EMI and finish sooner (reduce tenure), or keep the tenure and pay a smaller EMI (reduce EMI).
With the default numbers — ₹15,00,000 outstanding at 9% over 120 months, an EMI of ₹19,001 and total interest of ₹7,80,164 — a one-time prepayment of ₹2,00,000 either clears the loan in 97 months and saves ₹2,49,847, or cuts the EMI to ₹16,468 and saves ₹1,04,022.
When Does Prepayment Make Sense?
- The loan's interest rate is higher than the after-tax return you would earn on the same money elsewhere.
- You have an emergency fund and have already cleared more expensive debt, such as credit card balances.
- There is no prepayment charge. RBI guidelines generally bar these on floating-rate loans to individuals, but fixed-rate loans may carry them, so check your agreement.
- You are not giving up tax benefits you rely on. Some loans, such as home loans, may carry tax deductions that depend on your tax regime, so check what you would lose.
Loan Details
Current EMI at these terms: ₹0
New tenure: 0 months (was 0)
New EMI: ₹0
This is an estimate, not an offer. The figures above are indicative calculations based on the numbers you entered and standard industry formulas/rules of thumb. They are not a loan/insurance quote, a pre-approval, or a guarantee of approval by any bank, NBFC, or insurer. Actual eligibility, interest rate, premium, and approval are decided solely by the lender/insurer after their own underwriting and verification.
Related Calculators
Personal Loan EMI Calculator
Recompute your EMI schedule with the reduced principal.
Home Loan EMI Calculator
See a year-wise amortization summary after prepayment.
Recurring and Step-Up Prepayments
The calculator above models a single lump-sum prepayment. Many borrowers instead add a fixed amount to every EMI, or raise that amount each year as their income grows. The table shows what that looks like on the default loan (₹15,00,000 at 9%, 120 months, EMI ₹19,001). Each extra payment is applied straight to principal every month, and the EMI itself does not change.
| Scenario | Months to clear | Total interest | Interest saved | Extra paid over the loan |
|---|---|---|---|---|
| No prepayment | 120 | ₹7,80,164 | — | — |
| Extra ₹2,000 every month | 103 | ₹6,56,307 | ₹1,23,857 | ₹2,04,000 |
| Extra ₹5,000 every month | 85 | ₹5,31,628 | ₹2,48,536 | ₹4,20,000 |
| Extra ₹5,000 a month, rising 10% each year | 79 | ₹5,03,297 | ₹2,76,867 | ₹5,16,083 |
These scenarios commit different amounts of cash, so they are not like-for-like with the ₹2,00,000 one-time prepayment above. What they show is the pattern: small, regular extra payments started early can cut months off a loan, and stepping the amount up as your income grows shortens it further. Lenders may set minimum prepayment amounts or dates, and these figures assume a fixed rate, so check your loan terms.
Frequently Asked Questions
Should I reduce my tenure or reduce my EMI after prepaying?
Reducing tenure (keeping the same EMI) almost always saves more total interest, since you clear the loan faster. Reducing EMI (keeping the same tenure) gives you immediate monthly cash-flow relief instead. This calculator shows the interest saved under both, so you can decide based on your own priorities.
Does prepayment always make sense?
Usually, if your loan’s interest rate is higher than the after-tax return you’d get by investing that money elsewhere. Also check whether your lender charges a prepayment penalty (common on fixed-rate loans, rare on floating-rate retail loans in India).
Where can I estimate a fresh EMI after prepayment?
Use our Personal Loan EMI Calculator or Home Loan EMI Calculator with your reduced principal and new tenure/EMI to double-check the numbers.