Loan Prepayment Calculator
Most borrowers treat a loan as a fixed monthly expense for years, but the schedule behind it is flexible: money paid beyond the EMI attacks the balance directly, and every rupee removed early never earns interest again. This calculator takes a lump sum or one extra instalment a year, rebuilds the schedule month by month, and reports the interest saved and the months erased.
Enter values
Results
- Interest saved
- ₹2,59,255.79
- Tenure cut by
- 2 years 5 months
- Loan closes in
- 7 years 7 months
- Interest payable after prepayment
- ₹4,04,069.03
- Interest if you do nothing
- ₹6,63,324.83
How is the Loan Prepayment calculated?
Enter the outstanding balance, the rate, the tenure left and the prepayment amount, then pick a style — one lump sum today, or one extra EMI every twelve months. Both paths keep your instalment unchanged and re-run the amortization until the balance clears. Interest saved leads the results, followed by the months erased, the new closing time, and the interest payable with and without the prepayment.
Formula
Baseline: EMI = P × r × (1 + r)^n ÷ ((1 + r)^n − 1). After a lump sum S the schedule restarts from B = P − S at the same EMI, and the balance after k instalments is B × (1 + r)^k − EMI × ((1 + r)^k − 1) ÷ r, run forward until it turns negative. Interest saved = baseline interest − recomputed interest.
Example
A ₹12,00,000 balance at 9.5% with 10 years left carries a ₹15,527.71 EMI and ₹6,63,324.83 of remaining interest. Prepaying ₹2,00,000 today restarts the schedule from ₹10,00,000: the loan then closes in 91 instalments, or 7 years 7 months, with ₹4,04,069.03 of interest — saving ₹2,59,255.79 and 29 months.
Things to remember
The saving is largest when the prepayment happens early, because interest is charged on a balance that has barely shrunk yet. Check foreclosure charges first — floating-rate loans to individuals carry none — and remember the EMI does not fall: this route buys back interest and time, not monthly relief.
Frequently Asked Questions
Should I prepay my loan or invest the money instead?
Prepaying earns a guaranteed return equal to your loan rate — 9.5% in the example above — while investing carries risk. Clearing debt usually beats a 7% fixed deposit, though a long equity SIP may win on raw numbers. Decide with both figures in front of you.
Do banks charge a penalty on loan prepayment?
For floating-rate loans to individuals the RBI prohibits foreclosure charges, so most home, car and personal loans close early for free. A fixed-rate agreement may still levy 2–5% of the outstanding balance, so read the sanction letter before transferring a bonus.
Is it better to reduce the EMI or shorten the tenure?
Most lenders let you choose after a part-payment. Shortening the tenure saves far more interest because the balance falls sooner; reducing the EMI only frees monthly cash. This calculator holds the instalment fixed and measures the months you erase.
How much does one extra EMI a year actually save?
On ₹12,00,000 at 9.5% with ten years left, paying one extra instalment every year clears the loan in 107 months instead of 120 and saves ₹79,670.76 of interest — 13 months gone without changing the monthly EMI at all.
Related Calculators
- EMI CalculatorLoan & EMICalculate your monthly EMI, total interest payable and total payment for any loan, with a worked example and repayment summary.
- Home Loan EMI CalculatorLoan & EMICalculate the EMI, total interest and first-year interest on a home loan of any amount and tenure.
- Loan Tenure CalculatorLoan & EMIFind how many months a loan takes to clear at your EMI, with total interest and the final instalment.
- Loan Amortization CalculatorLoan & EMISee where every rupee of a loan goes — principal, interest and closing balance, year by year.