Use this free loan prepayment calculator to estimate how an extra lump-sum payment could change the cost of a fixed-rate reducing-balance loan. Compare keeping your existing EMI and finishing earlier against lowering the EMI while keeping the original remaining term. Enter your own lender rate and current outstanding principal.
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What if you prepay your loan?
Compare reducing the loan tenure against reducing the monthly EMI.
Your remaining loan and proposed payment
Month 0 means prepay immediately; month 24 means prepay after the 24th regular EMI. A requested prepayment above the remaining balance is capped at full closure.
All numbers are calculated locally in your browser.Potential interest savings · Keep the EMI
₹14,12,143
Compared with no prepayment at the same fixed rate
Keeping the EMI generally shortens the term and reduces more interest. Choosing a lower EMI improves monthly cash flow while retaining the original payoff horizon.
This estimate assumes a stable interest rate and payment dates. Check your lender’s prepayment and recalculation rules.
Compare all three repayment paths
| Measure | No prepayment | Keep EMI | Lower EMI |
|---|---|---|---|
| EMI after prepay date | — | — | — |
| Months until payoff | — | — | — |
| Interest from today | — | — | — |
| Interest saved | — | — | — |
| Savings after prepay charge* | — | — | — |
*The charge is modelled as a percentage of the actual principal prepaid. Taxes on the charge, other fees, cash-flow opportunity cost and tax benefits are excluded. The prepayment itself is principal repayment, not a saving.
View year-wise remaining balances
| Elapsed | No prepayment | Keep EMI | Lower EMI |
|---|
How the prepayment comparison is calculated
The baseline is a conventional reducing-balance loan using the outstanding principal today, the annual interest rate divided by 12, and the remaining loan tenure in months. At each month, interest is calculated on the opening balance, followed by the regular EMI. The proposed prepayment is applied to principal after the selected month’s scheduled instalment. Month zero means immediately.
The calculator then models two alternatives. Keep EMI: maintain the original monthly instalment and pay off the reduced balance as soon as possible. Lower EMI: recalculate a smaller monthly payment over the original remaining instalments. Estimated interest saved is the difference from the no-prepayment schedule, not the prepaid principal itself.
Worked example: ₹5 lakh extra payment after two years
Consider ₹30 lakh outstanding at a fixed 9% annual rate with 20 years remaining. The baseline EMI is approximately ₹26,992. A ₹5 lakh prepayment after 24 instalments could, under these assumptions, shorten repayment by roughly 70 months and reduce future interest by approximately ₹14.12 lakh if the EMI stays unchanged. If the tenure is retained, the recalculated EMI is about ₹22,310 and interest savings are smaller. Actual lender results depend on dates and terms.
Is it better to reduce EMI or reduce tenure?
If you can comfortably continue paying the original EMI, shortening the tenure generally saves more interest because the balance falls faster. Reducing EMI may be preferable if monthly cash flow is tight or you need a larger emergency buffer. The calculator shows both outcomes rather than recommending an individual financial decision.
What can change your actual prepayment savings?
The model assumes a constant interest rate, regular payments in arrears, no tax benefits and no future rate revisions. Real home and personal loans can have floating rates, revised repayment schedules, processing or foreclosure terms and lender-specific rounding. Optional prepayment charges reduce the estimated net saving but do not reduce the loan principal.
India’s RBI Pre-payment Charges on Loans Directions, 2025 apply to specified loans sanctioned or renewed from 1 January 2026; their treatment depends on the loan and borrower category. Do not assume the same fee rule applies to every older, fixed-rate, business or other borrowing arrangement. Check the lender’s current agreement and key facts statement.
Frequently asked questions
Can a borrower prepay a personal, home or car loan?
Often, but the amount, timing, fees and choice of EMI or tenure reduction depend on the loan contract and applicable regulations. Confirm what your lender allows before paying.
Does prepayment always save interest?
A genuine principal reduction generally reduces future interest at an unchanged positive rate, but charges and other costs can offset the saving. With a zero interest rate, there is no interest to save.
What if I prepay enough to close the loan?
The calculator caps the applied prepayment at the projected remaining principal. It then displays zero future EMIs and the payoff month. Your lender may still require a final settlement statement.
Does this model floating interest rates or loan-against-FD overdrafts?
No. This tool models a conventional fixed-rate amortising loan. A daily-balance overdraft against an FD has different interest and repayment rules; it should not be evaluated with this EMI schedule.
More loan and deposit tools
Start with the EMI Calculator for monthly repayment estimates, or compare savings using our FD Calculator. See our loan APR versus interest-rate guide for how fees affect borrowing comparisons, and browse the Finance section.
Disclaimer: Illustrative fixed-rate loan calculations only; not personalised credit, tax or investment advice. Your bank determines actual eligibility, fees, recalculated EMI, repayment date and final interest. Do not act without checking official loan documents.