Loan Prepayment Calculator

⚡ In shortPaying a lump sum into your loan does more than reduce the balance — because interest is charged on the outstanding principal every month, a prepayment made early removes years of future interest. In a reducing-balance loan, each EMI is split between interest (on the balance) and principal. Early on, most of the EMI is interest, so the balance falls slowly. A part-prepayment goes entirely against principal, which immediately shrinks the base on which all future interest is charged. Keeping the EMI the same and letting the tenure shorten saves far more than reducing the EMI, because you keep paying the same amount against a smaller balance. This calculator amortises your loan month by month, applies your lump sum in the month you choose, and compares the result with the original schedule to show the new tenure and the interest saved. The earlier the prepayment, the larger the saving — the same amount paid in year 1 saves several times what it would in year 10.

Open the free Loan Prepayment Calculator →

How it is calculated

In a reducing-balance loan, each EMI is split between interest (on the balance) and principal. Early on, most of the EMI is interest, so the balance falls slowly. A part-prepayment goes entirely against principal, which immediately shrinks the base on which all future interest is charged. Keeping the EMI the same and letting the tenure shorten saves far more than reducing the EMI, because you keep paying the same amount against a smaller balance. This calculator amortises your loan month by month, applies your lump sum in the month you choose, and compares the result with the original schedule to show the new tenure and the interest saved. The earlier the prepayment, the larger the saving — the same amount paid in year 1 saves several times what it would in year 10.

Frequently asked questions

Should I reduce the EMI or the tenure when prepaying?

Reducing the tenure saves considerably more interest, because you continue paying the same EMI against a smaller balance. Reducing the EMI only eases monthly cash flow.

Are there prepayment charges on a home loan?

For floating-rate home loans to individuals, the RBI does not permit foreclosure or prepayment penalties. Fixed-rate loans and many personal or business loans can still carry a charge — check your sanction letter.

Does prepaying affect my section 24(b) or 80C benefit?

Prepaying reduces future interest, so the interest you can claim under §24(b) falls in later years. Principal repaid still counts under 80C (old regime), subject to the overall ₹1.5 lakh limit.

Is it better to prepay the loan or invest the money?

Compare your loan rate with the return you can reliably earn after tax. Prepaying a loan is a guaranteed, risk-free return equal to the interest rate; an investment has to beat that on a post-tax basis to be worth it.

Related reading

India Law Simplified is an AI-assisted tool, not a substitute for a licensed CA or advocate. Tax rules and limits change with each Finance Act — verify before relying on any figure.