Loan Prepayment Calculator
Calculate how much interest you save by making a lump-sum prepayment. Compare reducing tenure vs reducing EMI.
Loan prepayment — making an extra lump-sum payment towards your loan — is one of the most powerful tools for reducing total interest cost. The interest savings from prepayment are disproportionately large when done early in the loan tenure (because interest accrues on the outstanding principal). This calculator quantifies exactly how much interest you save with a prepayment and whether you should reduce your tenure (keeping EMI the same) or reduce your EMI (keeping tenure the same) — a choice that depends on your cash flow situation.
📋 How to Use This Calculator
Enter your current outstanding loan balance, interest rate, and remaining tenure in months. Enter the prepayment amount you plan to make. Then choose your preference: reduce tenure (same EMI — recommended for maximum interest savings) or reduce EMI (same tenure — better if you need lower monthly commitments). The calculator shows the new tenure or EMI, and crucially, the total interest saved by making this prepayment. This is the number that makes prepayment so compelling.
💡 Key Facts & Information
Reduce tenure vs reduce EMI: Mathematically, reducing tenure saves more interest in the long run because you exit the loan faster. However, reducing EMI improves monthly cash flow. Many financial planners recommend reducing tenure for home loans and reducing EMI for personal loans (shorter tenure anyway). Prepayment timing matters: the same ₹2 lakh prepayment on a ₹50 lakh, 20-year loan saves about ₹5.5 lakh if done in year 1, but only ₹1.2 lakh if done in year 15. Early prepayments have 4–5x the impact of late prepayments.