Loan Prepayment Calculator
Compare reduce-EMI vs reduce-tenure after a loan prepayment and see interest saved
| Item | No prepayment | Keep EMI | Keep tenure |
|---|---|---|---|
| Monthly EMI | ā¹26,035 | ā¹26,035 | ā¹21,696 |
| Extra each month | ā¹0 | ā¹0 | ā¹0 |
| Loan ends in | 20 yr | 13 yr 6 mo | 20 yr |
| Total interest | ā¹32,48,326 | ā¹17,04,912 | ā¹27,06,940 |
| Interest saved | ā¹0 | ā¹15,43,414 | ā¹5,41,386 |
| Total paid (incl. prepayment) | ā¹62,48,326 | ā¹47,04,912 | ā¹57,06,940 |
Runs entirely in your browser. Nothing you type or upload is sent to us or stored.
Results are estimates, not financial advice. Rates, charges and rules change, so confirm with your bank, post office or a financial adviser before you decide. Terms of use
How to Use
- Enter the Outstanding loan (the principal you still owe, from your latest loan statement), the Interest rate and the Remaining tenure in years or months.
- Enter the One-time prepayment you plan to make now. This could be a bonus, an FD maturity or savings.
- If you can pay something on top of the EMI each month, add it as an Extra payment every month. You can leave this blank.
- Results update as you type. Compare Keep EMI (the loan ends sooner) with Keep tenure (a lower EMI) by interest saved, new tenure and new EMI.
- The balance chart and the side-by-side table show total interest and total paid under each choice. Use Share to save or send the result.
What does a loan prepayment do?
A prepayment (or part-payment) is money you pay towards your loan over and above the regular EMI. All of it goes to cut the principal. Interest on a home, car or personal loan is charged each month on the outstanding principal, so a smaller principal means less interest every month for the rest of the loan. Prepayments in the early years save the most, because that's when the balance is highest and so is the interest on it. This loan prepayment calculator shows how much you save.
After you prepay, your lender will usually ask which of two things you want:
- Keep the EMI, reduce the tenure. You keep paying the same EMI, so the loan closes earlier.
- Keep the tenure, reduce the EMI. The loan ends on the original date, but each EMI is smaller.
The calculator works out both side by side, so you can see the trade-off in rupees.
How the calculation works
r = annual rate Ć· 12 Ć· 100, n = months left
Each month: interest = balance Ć r; principal repaid = EMI ā interest
The prepayment comes off the balance today. For "keep EMI", the old EMI is paid on the smaller balance until it reaches zero. For "keep tenure", a new EMI is worked out on the smaller balance for the same number of months left. Any extra monthly amount is added to the EMI in both cases. Interest saved is the interest on the original schedule minus the interest on the new one.
Worked example
You owe ā¹30,00,000 at 8.5% with 20 years left. Your EMI is ā¹26,035 and you'd pay about ā¹32.48 lakh in interest over the loan. You get a bonus and prepay ā¹5,00,000.
| Keep EMI | Keep tenure | |
|---|---|---|
| Monthly EMI | ā¹26,035 | ā¹21,696 |
| Loan ends in | 13 yr 6 mo | 20 yr |
| Interest saved | ā¹15,43,414 | ā¹5,41,386 |
Keeping the EMI saves nearly three times as much interest, and you're free of the loan six and a half years early. Lowering the EMI saves less, but it leaves ā¹4,339 more in your hands each month. That can matter if your income isn't steady.
Which option should you choose?
- Choose "keep EMI" if the current EMI is comfortable. It always saves more interest.
- Choose "keep tenure" if cash is tight, or if you want to put the EMI saving towards other goals.
- Build an emergency fund first. Money paid into a loan is hard to get back. Don't prepay with the money you'd need for a job loss or a hospital bill.
- Compare with investing. Prepaying saves interest at your loan rate, with no risk. If you expect to earn clearly more than that after tax somewhere else, investing may work out better, but those returns aren't guaranteed.
- Mind the tax angle. Under the old tax regime, home loan interest on a self-occupied house can be deducted (up to ā¹2 lakh a year). Prepaying shrinks that deduction a little, so your real saving is slightly lower if you claim it. The new tax regime doesn't give this deduction for a self-occupied home.
Prepayment charges
RBI rules bar banks and NBFCs from charging prepayment or foreclosure penalties on floating-rate loans taken by individuals for non-business purposes. Most home loans fall in this group. The RBI (Pre-payment Charges on Loans) Directions, 2025 extend this to more loans sanctioned or renewed from 1 January 2026. Fixed-rate loans can still carry a charge, and it must be shown in your sanction letter and Key Facts Statement. After a part-payment, ask your lender to confirm in writing which option (lower EMI or shorter tenure) it has applied.