Loan Prepayment Calculator

Prepaying a loan means paying more than your EMI, either as a one-time lump sum or a little extra every month. The extra money goes straight to the principal, so every later EMI carries less interest.

Month 24 means after two years of EMIs.
After a one-time prepayment
Most lenders reduce the tenure unless you ask for a lower EMI. Reducing the tenure saves more interest.
Results update as you type.

Interest saved

₹6,22,877

about 6.23 lakh

Loan ends
2 years 7 months earlier209 EMIs instead of 240
Total interest without prepayment
₹32,48,32732.48 lakh
Total interest with prepayment
₹26,25,45126.25 lakh
Regular EMI
₹26,035

Interest with prepayment, and interest saved

  • Interest still paid₹26,25,45180.8%
  • Interest saved₹6,22,87719.2%

About this calculator

Enter your loan, the prepayment and when you will make it. The calculator compares the loan with and without the prepayment and shows the interest saved and how much sooner the loan closes, or your new EMI if you choose to reduce it instead.

How to use it

  1. Enter the loan amount, the interest rate and the original tenure.
  2. Enter a one-time prepayment and the EMI number after which you will pay it, an extra amount with every EMI, or both.
  3. Choose whether the lender should reduce your tenure or your EMI after a one-time prepayment.
  4. Read the interest saved and the new end date or EMI.

The formula

Each month: interest = balance × r; balance = balance + interest − EMI − prepayment
r
the monthly rate: yearly rate ÷ 12 ÷ 100
EMI
the regular instalment from the original loan terms
prepayment
the one-time amount in its month, or the extra amount every month

The loan is run month by month twice, with and without prepayment; the interest saved is the difference between the two totals.

Worked example

₹30 lakh home loan at 8.5% for 20 years

  1. Regular EMI: ₹26,035. Total interest without prepayment: ₹32,48,327.
  2. Pay ₹2,00,000 extra after 2 years and keep the EMI: the loan ends 2 years 7 months early and you save ₹6,22,877.
  3. Ask for a lower EMI instead: the EMI drops to ₹24,224, but the saving is only ₹1,91,158.
  4. Or pay just ₹2,000 extra every month: the loan ends 3 years 2 months early, saving ₹6,13,186.

What the result means

Reducing the tenure almost always saves far more interest than reducing the EMI, because the loan stops sooner. Reducing the EMI makes sense when you need more room in your monthly budget.

Prepayments made early in a loan save the most, since that is when the balance and the interest are highest.

Assumptions

  • The interest rate stays the same for the whole loan.
  • Interest is charged monthly on the reducing balance.
  • Extra monthly amounts start with the first EMI.

Limitations

  • Floating-rate loans change with the lender’s benchmark rate, so real savings will differ.
  • Prepayment charges are not included. Under RBI rules, banks cannot charge them on floating-rate loans taken by individuals for purposes other than business; fixed-rate loans may carry a charge.
  • Lenders round EMIs and may set their own rules for applying prepayments.

Frequently asked questions

Should I reduce my EMI or my tenure after prepaying?

Reducing the tenure saves more interest. Reducing the EMI eases your monthly budget. In the example above, tenure reduction saves about three times as much.

Is there a penalty for prepaying a home loan?

Not on floating-rate loans taken by individuals for non-business purposes, under RBI rules. Fixed-rate loans can have a prepayment charge; check your loan agreement.

Is it better to prepay or invest?

Prepaying earns a guaranteed return equal to your loan rate. Investing may earn more, but with risk. Many people do some of both.

For information only. This calculator gives estimates based on the figures you enter and the assumptions listed above. It is not financial advice. Actual amounts depend on the lender’s or institution’s terms, fees, rounding and rate changes. Please confirm with them before you decide.

Last reviewed on 1 October 2026. Found a mistake? Tell us.