About the Loan Prepayment Calculator
Paying a little extra on your loan can save a large amount of interest. This prepayment calculator shows the interest saved and how many years earlier the loan closes when you add an extra monthly payment, a one-time prepayment, or both.
How to use this calculator
- Enter the loan amount, interest rate and original tenure.
- Add any extra amount you can pay every month.
- Add a one-time prepayment and the year you would make it.
- Compare interest and tenure with and without prepaying.
Formula
The calculator runs the loan month by month. Interest is charged on the balance, then the EMI and any extra payment reduce the principal. The EMI stays the same, so prepaying shortens the tenure.
Example
On a ₹30 lakh loan at 8.5% for 20 years, paying ₹5,000 extra every month plus ₹2 lakh once in year 3 saves about ₹14.41 lakh in interest and closes the loan about 7 years 7 months early.
Frequently asked questions
Is it better to reduce tenure or EMI after prepaying?
Reducing the tenure usually saves more interest. Reducing the EMI lowers your monthly outgo instead. This calculator shows the reduce-tenure option.
Are there charges for prepaying a home loan?
In India, lenders generally cannot charge prepayment penalties on floating-rate home loans taken by individuals. Fixed-rate loans may carry charges, so check your loan agreement.
Should I prepay or invest the extra money?
It depends on your loan rate, expected investment returns, tax benefits and comfort with risk. Prepaying gives a certain saving equal to your loan rate.
These results are estimates for illustration and education only, not investment advice.