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Loan Prepayment Calculator

Calculate exactly how much interest you save and how many months you cut from your loan by making a one-time lump sum prepayment.

Your Loan Details
Prepayment Strategy

When & How to Prepay

Prepay Early for Max Savings

A prepayment in year 3 saves 3–4× more interest than the same amount in year 15. The earlier you prepay, the longer the reduced principal has to compound.

Reduce Tenure, Not EMI

Always opt to reduce tenure after prepayment. Keeping the EMI same and shortening the loan saves more total interest than lowering the EMI.

Use Windfalls Wisely

Annual bonuses, inheritance, gratuity payouts - channelling a portion into loan prepayment can save lakhs in interest with no market risk.

FAQ

Frequently Asked Questions

Yes - significantly. A ₹5 lakh prepayment on a ₹50 lakh, 9%, 20-year loan in year 3 saves approximately ₹10–12 lakh in total interest and reduces tenure by 3–4 years. The earlier the prepayment, the greater the savings.

Always reduce tenure if you can afford the current EMI. Keeping the EMI same and shortening the loan saves more total interest than lowering the EMI. Reducing EMI gives more monthly cash flow but costs more in total interest over the loan life.

RBI prohibits prepayment penalties on floating-rate home loans for individual borrowers (since 2012). Fixed-rate loans may attract 1–3% foreclosure charge. Personal loans and car loans may charge 2–4% prepayment penalty - check your loan agreement before prepaying.

Earlier is always better - in the first few years, 80%+ of EMI goes to interest. A prepayment in year 3 saves far more than the same amount in year 15. Best times: when you receive an annual bonus, inheritance, gratuity payout or any large windfall.

Part payment (partial prepayment) is paying a lump sum in addition to regular EMIs without closing the loan. Full prepayment (foreclosure) pays off the entire balance. Part payments reduce future interest. Foreclosure eliminates all future interest but may attract foreclosure charges on fixed-rate loans.

Compare post-tax loan cost vs expected investment return. If home loan is 9% and equity mutual funds historically return 12%, investing may build more wealth. But prepaying is risk-free. Most advisors suggest a 50:50 approach - partial prepayment + continued SIP investing.