💰 Loan Prepayment Calculator
See how prepaying your loan saves interest and reduces tenure. Compare different strategies to find what works best for you.
💡 Prepayment Plan
📊 Comparison
📋 Your Strategy
Amortization Tables
Interest: Principal: Prepay: Closing Bal:
| Month | EMI | Interest | Principal | Prepay | Balance |
|---|
Understanding Loan Prepayment
Loan prepayment is one of the most powerful tools for reducing your debt burden and saving lakhs in interest payments. By paying extra towards your loan principal, you effectively reduce the outstanding balance, which leads to lower interest calculations in subsequent periods.
Our comprehensive Loan Prepayment Calculator helps you model different prepayment strategies - whether it's a one-time lump sum payment, regular recurring prepayments, or a custom schedule based on your expected cash flows. Make data-driven decisions and find the optimal prepayment approach for your financial situation.
How We Calculate
EMI formula: EMI = P × r × (1+r)^n / ((1+r)^n − 1), where P is principal, r is monthly interest rate, n is months.
Prepayment impact: For each strategy, we simulate amortization: apply EMI monthly, reduce principal, and when a prepayment occurs, subtract the amount directly from the remaining principal, then recompute the remaining schedule.
Interest saved: Compare total interest paid with and without prepayments. Time saved: Difference in months to closure.
Estimates for planning only. Bank rules and fees may vary; confirm with your lender.
Prepayment Strategies Explained
💵 One-time Prepayment
Best for: Bonuses, inheritance, or windfall gains
Make a single lump-sum payment towards your loan principal at any point during the tenure.
A ₹5 lakh one-time prepayment on a ₹50 lakh home loan at 8% can save over ₹15 lakhs in interest.
🔄 Recurring Prepayment
Best for: Disciplined savers with regular income
Pay a fixed extra amount at regular intervals - yearly, half-yearly, or quarterly.
Paying ₹50,000 extra yearly on a ₹40 lakh loan can save ₹8-10 lakhs in interest.
📅 Custom Timeline
Best for: Varying income or planned windfalls
Plan specific prepayment amounts for different years based on your expected cash flows.
Year 1: ₹2L, Year 3: ₹5L, Year 5: ₹3L - calculator shows exact savings for your schedule.
How to Use This Calculator
Enter Loan Details
Input your loan amount, interest rate, and tenure - or use current loan balance if already started.
Choose Strategy
Select one-time, recurring, or custom timeline prepayment based on your cash flow situation.
Set Goal
Decide whether to reduce tenure (recommended) or reduce EMI based on your preference.
Compare Results
View side-by-side comparison of with/without prepayment scenarios and see your total savings.
Reduce Tenure vs Reduce EMI
| Goal | How it Works | Interest Savings | Best For |
|---|---|---|---|
| Reduce Tenure | EMI stays same, loan finishes earlier | Maximum savings (recommended) | Most borrowers, preferred by banks |
| Reduce EMI | Tenure stays same, monthly payment reduces | Lower savings vs tenure reduction | Those needing immediate cash flow relief |
Recommendation: Choose "Reduce Tenure" for maximum interest savings. Most banks prefer this option and it doesn't require EMI restructuring paperwork.
Smart Prepayment Tips
- Prepay early: Maximum benefit comes from prepayments in the first 5-7 years when interest component is highest.
- Check for penalties: Floating rate home loans typically have no prepayment penalty. Fixed rate loans may charge 2-4%.
- Maintain emergency fund: Keep 6-12 months of expenses as buffer before aggressive prepayments.
- Consider tax benefits: If your loan offers tax deductions (Section 80C/24b), factor in post-tax cost before prepaying.
- Compare with investments: If you can earn higher returns than loan interest rate, investing might be better.
- Use bonuses wisely: Annual bonuses are perfect for recurring prepayments without affecting monthly budget.
When NOT to Prepay Your Loan
⚠️ High-Interest Debts
If you have credit card debt or personal loans with higher interest rates, clear those first before prepaying low-interest home loans.
⚠️ No Emergency Fund
Build an emergency fund of 6-12 months expenses before making large prepayments. Financial security comes first.
⚠️ Heavy Penalties
If your loan has significant prepayment charges, calculate if total savings exceed the penalty amount.
⚠️ Better Investment Options
If you can earn guaranteed returns higher than your loan interest (after tax), consider investing instead of prepaying.
Frequently Asked Questions
What is loan prepayment and how does it work? ▾
Which prepayment strategy is best for me? ▾
Should I reduce tenure or reduce EMI? ▾
When is the best time to prepay my loan? ▾
Are there any charges for prepaying my loan? ▾
How much should I prepay each year? ▾
Can I combine different prepayment strategies? ▾
What if I can't maintain regular prepayments? ▾
Prepayment Example Scenarios
Here are real-world examples showing the power of prepayment:
| Scenario | Loan Details | Prepayment Strategy | Total Savings |
|---|---|---|---|
| Conservative | ₹50L @ 8%, 20 years | ₹50,000 annual recurring | ₹8-10 lakhs saved |
| Moderate | ₹75L @ 8.5%, 20 years | ₹2L one-time + ₹1L yearly | ₹18-22 lakhs saved |
| Aggressive | ₹1Cr @ 9%, 25 years | ₹5L one-time + ₹2L yearly | ₹40-50 lakhs saved |
Why Choose Our Prepayment Calculator?
Our calculator goes beyond basic prepayment calculations by offering three distinct strategies, dual optimization goals, and detailed side-by-side comparisons. Whether you're planning your first prepayment or optimizing an existing strategy, our tool provides all the insights you need.
The interactive comparison view instantly shows how much you'll save in interest and time. Experiment with different scenarios, adjust prepayment amounts and frequencies, and find the perfect balance between aggressive debt reduction and maintaining financial flexibility. Make confident, data-driven decisions about your loan prepayments.