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Loan Prepayment Calculator

Calculators · Added 14 August 2026

When you prepay a loan the lender offers a choice: keep the EMI and finish sooner, or keep the end date and pay less each month. The two are not equivalent — one saves far more interest than the other — and borrowers are frequently defaulted into the weaker option without being told the alternative exists. This calculator shows both.

What you still owe, from your latest statement.

%
yrs
After prepaying, I want to

How to use the loan prepayment calculator

  1. 1Enter the outstanding principal from your latest statement — not the amount you originally borrowed.
  2. 2Enter your current interest rate and the tenure remaining.
  3. 3Enter the prepayment you are considering.
  4. 4Choose what you want to do afterwards: keep the EMI and finish earlier, or keep the end date and lower the EMI.
  5. 5Press Calculate. The before-and-after table shows the effect, and a panel underneath shows what the other option would have saved.

Examples

Prepaying to shorten the loan

Input
₹30,00,000 outstanding at 9% with 20 years left, prepaying ₹5,00,000, keeping the EMI
Result
About ₹16,92,581 of interest saved and the loan finishes 82 months early

A ₹5,00,000 prepayment returns more than three times itself in avoided interest.

The same prepayment, lowering the EMI

Input
Identical figures but keeping the end date
Result
About ₹5,79,671 saved, and the EMI falls from ₹26,992 to ₹22,493

The same money saves roughly a third as much. The EMI relief is real, but it is a cash-flow benefit rather than an interest one.

Why timing matters

Input
The same prepayment made in year fifteen instead of year one
Result
A far smaller saving, because there is much less remaining interest left to avoid

Prepay early. A rupee removed from the principal saves interest for every month it would otherwise have been outstanding.

About the loan prepayment calculator

Why the two options differ so much

A prepayment reduces the principal immediately. What happens next is a choice about how to re-amortise what is left, and the two paths diverge sharply.

Keeping the EMI means the same monthly payment now services a smaller balance, so more of each instalment attacks the principal and the loan closes early. Every month you no longer pay is a month of interest entirely avoided — and because those are the loan's final months, they are the ones you would otherwise have been paying for the longest.

Keeping the end date means the payment falls and the loan runs its original course. The principal is smaller so the interest is smaller, but you continue paying for the full term. You get the relief in cash flow instead of in interest, and on a twenty-year loan that trade costs roughly two-thirds of the potential saving.

Where the calculator stops and judgement starts

The arithmetic here is exact, and it is not the whole decision. Three things sit outside it and each can change the answer.

The first is prepayment charges. Floating-rate home loans to individuals are generally protected from them in India, but fixed-rate loans and most personal loans are not, and a charge of a few percent can consume a large share of the first year's saving. The agreement, not this page, is authoritative.

The second is the tax deduction on home loan interest, which lowers the effective cost of the debt for borrowers who claim it. Prepaying reduces the interest and therefore the deduction, so the net benefit is smaller than the gross figure shown — how much smaller depends on your regime and slab. The third is opportunity cost: a guaranteed saving at the loan rate is genuinely attractive, but not if funding it means dismantling an emergency fund or forgoing an employer match. The prepayment that leaves you unable to absorb a shock is a poor trade however good the interest figure looks.

Frequently asked questions

Should I reduce the tenure or the EMI?
Reducing the tenure saves substantially more interest — often three times as much on a long loan, as the examples show. Reducing the EMI helps monthly cash flow, which the interest figure does not capture and which genuinely matters if money is tight. If your income is stable and the EMI is affordable, tenure reduction is the stronger financial choice. Ask explicitly, because the default is often the other one.
Why do lenders default to reducing the EMI?
It is the option that keeps the loan on their books longer and generates more interest, and it is also the one that sounds more attractive when described briefly — a lower monthly payment is an easy sell. That is not necessarily bad faith, but it is a reason to state your preference rather than accept what is offered.
Are there charges for prepaying?
For floating-rate home loans to individuals, prepayment charges are generally not permitted in India. Fixed-rate loans and many personal and business loans do carry them, sometimes a meaningful percentage of the amount prepaid. Check your loan agreement before assuming the saving shown here is the saving you get.
Is prepaying always the right move?
No. Compare the loan rate against what the money would earn elsewhere, after tax. Prepaying a 9% loan is a guaranteed 9% return, which is excellent — but home loan interest carries a tax deduction that lowers the effective rate for some borrowers, and an emergency fund you spend on a prepayment is no longer an emergency fund. The arithmetic here is only one input to that decision.
Should I prepay early or late in the loan?
Early, decisively. Interest accrues on the outstanding balance for as long as it is outstanding, so principal removed in year two avoids interest for eighteen more years while the same amount in year fifteen avoids only five. The third example above shows the difference, and it is large.

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