Loan Prepayment Calculator
Calculate how much interest you save by making a lump-sum prepayment on your home, car, or personal loan. See your new loan tenure after prepayment.
e.g. 240 for 20 years
How to use
- Enter your original loan amount, interest rate, and tenure in months.
- Enter the prepayment amount you plan to make.
- Enter after which month you plan to prepay.
- Click Calculate to see interest saved and new tenure.
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Making a lump-sum prepayment on a loan — even once — can save a significant amount of interest over the long tenure. This is because home and car loans are structured so that early EMIs are mostly interest. When you prepay, you reduce the outstanding principal, which directly reduces the interest calculated for all future months.
For example, a ₹50 lakh home loan at 8.5% for 20 years has an EMI of ₹43,391 and total interest of ₹54.1 lakhs. Making a prepayment of ₹5 lakhs after 1 year reduces total interest by approximately ₹9–10 lakhs and cuts about 3 years off the tenure — with no change to your monthly EMI.
Frequently Asked Questions
Should I reduce EMI or tenure after prepayment?
Reducing tenure saves significantly more interest because the principal clears faster, compounding less. Reducing EMI improves monthly cash flow but you pay interest for longer. If you can manage the current EMI comfortably, always choose to reduce tenure.
Are there prepayment charges on home loans?
RBI rules prohibit prepayment charges on floating-rate home loans for individual borrowers. Fixed-rate loans may charge 2–3% of the prepaid amount. Personal and car loans often have prepayment charges — check your loan agreement.
When is the best time to prepay — early or late in the loan?
Early prepayment saves far more interest because the principal is still large. Prepaying in year 1 or 2 typically saves 2–3x more than the same amount prepaid in year 10, because there are more future months of compounding on the reduced principal.
Can I make multiple prepayments?
Yes. Each prepayment further reduces principal and saves additional interest. This calculator shows the effect of a single prepayment; you can run it multiple times for different scenarios.
Disclaimer: Results are estimates for informational purposes only and do not constitute financial, tax, or investment advice. Figures may vary based on actual terms. Always consult a qualified financial advisor before making financial decisions.