Loan Prepayment Calculator
See exactly how much interest you save and how many months you shave off your loan tenure by paying a little extra each month or making a lump-sum prepayment.
Calculate Your Prepayment Savings
What is Loan Prepayment?
Loan prepayment is paying more than your scheduled EMI — either as a lump sum or extra monthly amount. Because the extra money goes straight to your principal, the outstanding balance drops faster, and so does the interest charged each month. Over time, this can save you lakhs of rupees and shorten your loan tenure by years.
Prepayments work best on long-tenure, high-balance loans (home loans, education loans) and on high-rate loans (personal loans at 12-24%). On a ₹50 lakh home loan at 8.5% with 20 years remaining, adding just ₹10,000/month as prepayment can save around ₹13 lakh in interest and finish the loan ~5 years earlier.
Per RBI rules in India, individual borrowers with floating-rate home loans pay zero prepayment penalty. Fixed-rate loans and personal loans typically charge a 2-5% foreclosure fee on the prepaid amount.
How the Calculator Works
It simulates two repayment paths in parallel:
- Baseline: Standard reducing-balance EMI for the full remaining tenure.
- With prepayment: Same EMI plus your extra monthly amount applied to principal every month, until the balance reaches zero.
The difference between the two paths gives you the total interest saved and tenure reduced. The math uses the standard EMI formula EMI = P × r × (1+r)n / ((1+r)n − 1) and a month-by-month amortization simulation.
Smart Prepayment Tips
- Prepay early: Years 1-5 of a long loan are interest-heavy. Prepayments here save the most.
- Use windfalls: Annual bonus, tax refund, gifts — direct lumps toward the highest-rate loan first.
- Step up gradually: Raise your prepayment by 5-10% each year as your salary grows.
- Choose tenure reduction: Most lenders default to "keep EMI same, shorten tenure." This saves more interest than the alternative.
- Prioritize high-rate debt: Pay off 14% personal loans before 8.5% home loans, despite the home loan's tax benefits.
- Don't drain your emergency fund: Keep 6 months of expenses liquid before aggressive prepayment.
- Compare with investment returns: If your post-tax loan rate is 6% and a SIP can return 12%, investing may beat prepaying — run the numbers both ways.