Reviewed by Finin2min Editorial Desk · Last reviewed 11 August 2026
Compare keeping the loan unchanged with a one-time prepayment, either reducing tenure or reducing EMI.
Compare prepayment choices
Check the lender’s statement, floating/fixed-rate terms and whether any prepayment charge is legally permitted.
Estimated interest saved net of charge
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New EMI / tenure
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Measure
Amount
Baseline remaining interest
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Post-prepayment interest
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Prepayment used
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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
Which prepayment strategy saves more interest — lower EMI or shorter tenure?
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Reducing tenure (keeping your EMI the same after prepayment) almost always saves more total interest than reducing EMI (keeping the same tenure), because the loan is fully repaid sooner and accrues interest for a shorter total period — even though your monthly cash flow relief is smaller with this option.
Is it better to prepay a loan or invest the money instead?
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It depends on whether your loan's interest rate is higher or lower than the after-tax return you could reasonably expect from investing that money. A high-interest loan (like a personal loan or credit card) is usually better prepaid; a low-interest, tax-deductible home loan is a closer call and depends on your risk appetite and other financial goals.
Are there charges for prepaying a loan?
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Floating-rate loans to individuals generally cannot carry prepayment penalties per RBI rules. Fixed-rate loans and some other loan types may still have prepayment charges — check your specific loan agreement before prepaying.
Scope: Computes interest saved and tenure reduction from a one-time or recurring extra loan prepayment, using the standard reducing-balance amortisation method.
Calculation logic
Compute the base amortisation schedule at the original EMI, rate and tenure using the standard reducing-balance formula.
At each entered prepayment point, reduce the outstanding principal by the prepayment amount, then continue the schedule either at the same EMI (resulting in a shorter tenure) or recalculated for a lower EMI over the original remaining tenure, per the option selected.
Interest saved = Total interest under the base schedule − Total interest under the prepayment schedule; Tenure reduction (where the same-EMI option is selected) = Base tenure in months − Prepayment-scenario tenure in months.
Inputs and assumptions
Prepayments are assumed to be applied entirely to principal with no prepayment charge, consistent with RBI's regulation exempting individual (non-business) floating-rate loan borrowers from prepayment penalties — for fixed-rate or business loans where a penalty may apply, the user should enter the penalty separately.
Interest rate is assumed constant across the projected schedule; a floating-rate loan's actual future schedule will differ once the rate resets.
Exclusions and edge cases
Does not model a rate reset mid-schedule unless the user re-runs the calculation with the revised rate from that point forward.
This calculator applies generically across loan types (home/personal/vehicle) using the same reducing-balance mechanics — loan-specific ownership costs (e.g., property tax for a home loan) are outside its scope.