Loan Prepayment Savings Calculator
See exactly how much interest a lump-sum prepayment saves you — and whether to reduce your tenure or your EMI.
- Free — no sign-up
- Instant, on-screen results
- Built by our CA · CS team
- Rules cited on the page
Enter your figures — the result on the right updates as you type.
Before vs after prepayment
Talk to an advisor before you prepay
We'll check your foreclosure terms, tax impact and whether prepaying beats investing.
Disclaimer: Indicative estimate assuming a fixed interest rate and a single lump-sum prepayment applied after the current EMI cycle. Actual savings vary with your bank's amortisation date, foreclosure/part-payment charges and rate resets.
Why a prepayment saves so much
On a reducing-balance loan, most of your early EMIs are almost entirely interest. A lump-sum prepayment wipes out principal directly, so every rupee you prepay stops earning interest for the bank for the rest of the loan. The earlier in the tenure you prepay, the bigger the interest saving.
Reduce tenure vs reduce EMI
When you make a part-payment, the bank lets you either keep your EMI the same and finish the loan earlier, or keep the tenure the same and drop your monthly EMI. They are not equal — one saves far more interest.
Your EMI stays the same, but the loan closes several months or years sooner. Because you stop paying interest earlier, this option saves the most interest. Best if your monthly EMI is comfortable and your goal is to be debt-free faster.
Your loan still runs for the full remaining tenure, but each monthly EMI drops. This improves cash-flow rather than maximising savings. Choose it if you need lower monthly outgo — for a new expense, a job change or a second EMI.
Worked example — ₹30L @ 9% for 180 months
Suppose you owe ₹30,00,000 at 9% p.a. with 180 months (15 years) left, and you make a one-time prepayment of ₹5,00,000 while choosing to reduce the tenure. Here is how the numbers work out:
Key terms explained
Prepayment / part-payment
A lump-sum payment over and above your EMI that goes straight to reducing the outstanding principal. It is different from foreclosure, which closes the whole loan at once.
No prepayment penalty (floating loans)
RBI bars banks from charging any prepayment or foreclosure fee on floating-rate home loans taken by individuals. Fixed-rate loans and some personal loans may still levy 2–5% — always confirm before you pay.
Reduce tenure
You keep paying the same EMI, so the loan ends sooner. Because interest accrues for fewer months, this maximises interest saved and is the default here.
Reduce EMI
You keep the same number of months but pay a smaller EMI. This frees up monthly cash-flow, though it saves less interest than reducing tenure.
Questions people ask
Short answers on Loan Prepayment Savings. Tap a question to open it.
01Is it better to reduce the EMI or the tenure when prepaying?
Reducing the tenure saves far more interest, because interest accrues on the outstanding balance over time. Reducing the EMI helps monthly cash flow but leaves you paying for the same number of years.
02When is the best time to prepay a loan?
As early as possible. In the initial years the bulk of each EMI is interest, so a prepayment then removes far more future interest than the same amount paid near the end of the tenure.
03Are there prepayment charges?
The RBI prohibits foreclosure charges on floating-rate loans taken by individuals for non-business purposes. Fixed-rate loans and many business loans can still carry a charge, typically 2% to 4% of the amount prepaid.
04Should I prepay a home loan or invest instead?
Compare the post-tax loan rate with the realistic post-tax return on the alternative. If you claim section 24(b) interest and 80C principal under the old regime, the effective loan cost falls, which can tilt the answer toward investing.
05Does prepayment affect my tax deduction?
Yes. Prepaying reduces the interest you pay in later years, so the section 24(b) deduction shrinks. That matters only if you are under the old regime and were actually using the full ₹2 lakh limit.
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Disclaimer: This tool gives indicative results for general guidance only and is not professional advice. Please verify with a qualified CA before acting on the numbers.