Compare prepayment choices
| Measure | Amount |
|---|---|
| Baseline remaining interest | — |
| Post-prepayment interest | — |
| Prepayment used | — |
How This Is Calculated
This calculator compares two prepayment strategies against your current loan schedule: reducing the EMI (keeping the same tenure) versus reducing the tenure (keeping the same EMI) after a lump-sum prepayment. It recalculates the loan amortization under each strategy to show exactly how much total interest you'd save and how much sooner (or how much lower your EMI becomes).
Frequently Asked Questions
Finin2min · Advanced financial model
Should you prepay the loan or invest the same cash?
Use the underlying cash flows and assumptions, not headline percentages alone. Enter annual rupee figures for salary and monthly periods for loans.
Enter values and compare scenarios.
Detailed methodology, worked example and assumptions
Compare at the same horizon
The baseline continues to pay the scheduled EMI; the prepayment case reduces loan principal today and maintains the original EMI until the debt is repaid early. Each subsequent payment released by the prepayment is assumed to be invested at the user's after-tax annual return. The alternative invests the same upfront money, including any actual prepayment charge, and continues the original EMI. Both paths are compared on the original loan maturity date.
The after-tax investment return is a scenario input, not an assurance. For example, when the return assumption is 0%, terminal prepayment advantage equals scheduled interest saved less any prepayment charge. When the expected investment return rises, investing may have greater modelled terminal wealth, but potentially also greater risk. Loan-rate resetting, tax benefits, cash-buffer needs and liquidity preferences matter.
Prepayment fee control
The fee is entered manually because different lender types, origination dates, purposes and fixed/floating products may be subject to different restrictions. A lender cannot automatically be assumed entitled to levy a charge. Check RBI's current directions and your agreement, then obtain a foreclosure statement with a valid payoff date before acting.
Worked example
With ₹30 lakh left at 8.5% annual reducing interest for 180 months, a ₹3 lakh immediate principal payment lowers the outstanding balance before the next EMI. Keeping EMI unchanged closes the loan earlier. This tool then shows both nominal interest savings and the terminal wealth comparison when the invest-instead assumption is 7% after tax.
Primary-source reference: Official source and current applicability. Review recent amendments, lender documents and facts before reliance.
The comparison assumes unchanged loan interest rates and an assumed after-tax investment return, and does not estimate market volatility, personal interest deduction benefits or regulatory prepayment-charge eligibility. This tool is an illustration, not legal, tax, employment or investment advice.