See how much interest you save – and how many years come off your loan – when you prepay part of it.
Loan Prepayment Calculator
See how much interest and how many EMIs you save by prepaying your loan – once or every year.
- Loan closes earlier by
- 4 years
- New tenure
- 16 years
- Current EMI
- ₹43,391
- Interest without prepayment
- ₹54,13,879₹54.14 lakh
- Interest with prepayment
- ₹38,10,188₹38.1 lakh
- Total prepaid
- ₹5,00,000₹5 lakh
- RBI rules do not allow banks to charge individuals a prepayment penalty on floating-rate loans. Fixed-rate loans and some NBFC loans may carry charges – check your loan agreement.
Results are estimates for educational purposes only and are not financial, tax or legal advice. For more details, do consult a lawyer or a subject-matter expert.
Outstanding loan: before vs after prepayment
View chart data as a table
| Year | Without prepayment | With prepayment |
|---|---|---|
| 1 | ₹49,00,489 | ₹44,00,489 |
| 2 | ₹47,92,181 | ₹42,47,986 |
| 3 | ₹46,74,300 | ₹40,82,003 |
| 4 | ₹45,46,000 | ₹39,01,349 |
| 5 | ₹44,06,359 | ₹37,04,727 |
| 6 | ₹42,54,375 | ₹34,90,725 |
| 7 | ₹40,88,957 | ₹32,57,807 |
| 8 | ₹39,08,918 | ₹30,04,302 |
| 9 | ₹37,12,965 | ₹27,28,389 |
| 10 | ₹34,99,691 | ₹24,28,088 |
| 11 | ₹32,67,566 | ₹21,01,242 |
| 12 | ₹30,14,923 | ₹17,45,507 |
| 13 | ₹27,39,949 | ₹13,58,328 |
| 14 | ₹24,40,670 | ₹9,36,926 |
| 15 | ₹21,14,937 | ₹4,78,276 |
| 16 | ₹17,60,412 | ₹0 |
| 17 | ₹13,74,550 | ₹0 |
| 18 | ₹9,54,582 | ₹0 |
| 19 | ₹4,97,492 | ₹0 |
| 20 | ₹0 | ₹0 |
Year-end balance comparison
| Year | Balance without prepayment | Balance with prepayment |
|---|---|---|
| 1 | ₹49,00,488.54 | ₹44,00,488.54 |
| 2 | ₹47,92,181.17 | ₹42,47,985.72 |
| 3 | ₹46,74,300.42 | ₹40,82,003.04 |
| 4 | ₹45,46,000.08 | ₹39,01,348.99 |
| 5 | ₹44,06,359.16 | ₹37,04,726.78 |
| 6 | ₹42,54,375.24 | ₹34,90,724.95 |
| 7 | ₹40,88,957.34 | ₹32,57,807.30 |
| 8 | ₹39,08,917.99 | ₹30,04,301.85 |
| 9 | ₹37,12,964.80 | ₹27,28,388.82 |
| 10 | ₹34,99,691.14 | ₹24,28,087.59 |
| 11 | ₹32,67,566.02 | ₹21,01,242.46 |
| 12 | ₹30,14,923.15 | ₹17,45,507.20 |
| 13 | ₹27,39,948.95 | ₹13,58,328.17 |
| 14 | ₹24,40,669.53 | ₹9,36,926.04 |
| 15 | ₹21,14,936.53 | ₹4,78,275.79 |
| 16 | ₹17,60,411.70 | ₹0.00 |
| 17 | ₹13,74,550.10 | ₹0.00 |
| 18 | ₹9,54,581.84 | ₹0.00 |
| 19 | ₹4,97,492.20 | ₹0.00 |
| 20 | ₹0.00 | ₹0.00 |
Explain this result
Your current EMI is ₹43,391. Over the full tenure you would pay ₹54,13,879 as interest.
A prepayment goes straight to reducing your principal. Because interest each month is charged on the outstanding balance (interest = balance × rate ÷ 12), a lower balance means less interest every month after that.
With your prepayments of ₹5,00,000 you pay ₹38,10,188 as interest instead – a saving of ₹16,03,691. Reducing the tenure usually saves more than reducing the EMI.
Frequently asked questions
Is it better to reduce EMI or tenure after prepaying?
Reducing tenure saves more interest. Reducing EMI eases your monthly budget. Pick tenure if your cash flow is comfortable.
Should I prepay my home loan or invest?
Compare your loan rate (after any tax benefit) with the post-tax return you can reasonably expect. Prepaying gives a guaranteed "return" equal to your loan rate. This is general information, not advice.
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Worked example
On a ₹50 lakh loan at 8.5% for 20 years (EMI ₹43,391), a single prepayment of ₹5 lakh after one year, keeping the EMI the same, cuts the loan by 4 years (48 EMIs) and saves about ₹16 lakh in interest.
Reduce tenure or reduce EMI?
Reducing the tenure saves far more interest. Reduce the EMI only if your monthly budget is tight.
Prepay or invest?
If your loan costs 8.5% and you are in a high tax bracket, prepaying gives a guaranteed, tax-free “return” of 8.5%. Investing may earn more over long periods, but with risk. Compare with the SIP calculator.
Rules to know
- RBI does not allow banks and NBFCs to charge foreclosure or prepayment penalties on floating-rate loans taken by individuals for non-business purposes.
- Ask the bank for a revised schedule in writing after every prepayment.