Loan Prepayment Calculator
Save Interest & Reduce Tenure
Use this if you pay more than your EMI every month, for example an EMI of ₹25,000 with an extra ₹5,000 added on top each time, instead of one lump sum.
Use this if you plan to make more than one lump sum payment during the loan, for example ₹5 lakh in year 3 and another ₹5 lakh in year 10. The prepayment entered above counts as your first one.
Enter your loan details to see how much you can save
We will show you interest saved, tenure reduced, and a side-by-side comparison.
When you take a home loan or personal loan in India, the bank does not just lend you the principal. It earns interest on that principal every single month for the entire tenure. On a ₹30 lakh home loan at 9% for 20 years, the total interest you pay by the end comes to roughly ₹34.8 lakh, close to the loan amount itself. Prepaying even a part of the principal early is the single most effective way to cut that interest down.
This home loan and personal loan prepayment calculator shows you exactly how much interest you save when you make a lump sum payment toward your loan. Enter your loan details, the month you plan to prepay, and the prepayment amount. The calculator runs a full month by month amortization and shows your new tenure or new EMI instantly, along with total interest saved and a comparison chart.
What Is Loan Prepayment and How Does It Work?
Loan prepayment means paying an amount over and above your regular monthly EMI toward the outstanding principal of your loan. Reducing the principal immediately lowers the interest charged on every EMI for the rest of the tenure.
Every EMI has two parts, a principal portion and an interest portion. In the early months of a loan, the interest portion is high because the outstanding principal is still large. This is why prepaying 10 to 15% of the outstanding amount in the first 3 to 5 years saves far more than making the same prepayment in year 10 or 15.
Why Use This Calculator Instead of a Generic EMI Calculator?
A standard EMI calculator only tells you your monthly payment for a given loan. It cannot show the impact of a lump sum paid at a specific point during the loan. Entering a prepayment amount here triggers a full month by month amortization up to that month, applies the prepayment to the outstanding principal, and recalculates either a shorter tenure or a lower EMI from that point forward.
Shows exact interest saved in rupees
Not a rough percentage. This is the actual rupee amount you save by prepaying a specific sum at a specific month, based on real month by month amortization rather than a simplified estimate.
Compare reduce tenure vs reduce EMI
These two prepayment modes lead to very different outcomes. Tenure reduction saves more total interest. EMI reduction frees up cash every month. This calculator shows both so you can pick based on your situation.
Shows you the best time to prepay
Change the prepayment month and run the calculator again. Prepaying in month 12 will always save more than the same amount prepaid in month 60. The earlier you prepay, the larger the saving.
Works for all Indian banks and loan types
Whether you need a home loan prepayment calculator or one for a personal, car, or education loan, this uses the same standard amortization formula that Indian banks and housing finance companies use, for any lender.
How the calculator applies prepayment: The prepayment is applied after the regular EMI of that month. The EMI first reduces the principal by its own principal component, then the prepayment amount is subtracted from the remaining outstanding balance. This matches how most Indian banks process prepayments.
Reduce Tenure vs Reduce EMI: Which Is Better?
When you make a prepayment, your lender asks you to choose one of two options. Reduce tenure keeps your EMI the same and closes the loan sooner, which almost always saves more total interest. Reduce EMI keeps your tenure the same and lowers your monthly payment instead, which helps your cash flow but costs more in total interest over the life of the loan.
Use the Prepayment Mode dropdown above to try both and see the difference on your own loan. For the full mechanics, worked comparison, and guidance on when each option makes more sense, see our detailed guide on reducing EMI versus reducing tenure after prepayment.
How the Prepayment Calculation Works
The calculation runs in three steps under the hood. Knowing these helps you trust the output and read the results correctly.
EMI = [P × r × (1 + r)n] / [(1 + r)n− 1]- P = Original loan amount
- r = Monthly interest rate (annual rate ÷ 12 ÷ 100)
- n = Total tenure in months
The calculator runs month by month: each month it splits the EMI into interest (outstanding balance × monthly rate) and principal (EMI minus interest), then reduces the outstanding balance by the principal portion. After X months, it records the exact outstanding principal at that point.
New Principal = Outstanding − Prepayment | New Tenure = log(EMI ÷ (EMI − New Principal×r)) ÷ log(1+r)- Tenure Reduction mode: EMI stays the same, new tenure is computed from the formula above
- EMI Reduction mode: New EMI = [New Principal × r × (1+r)remaining n] ÷ [(1+r)remaining n− 1]
- Interest Saved: Original total payment minus (EMIs paid before prepayment + the prepayment itself + EMIs paid after prepayment)
The interest saved figure accounts for every payment, including the prepayment amount itself. It is the net saving over the entire loan lifetime compared to not prepaying at all.
How to Use This Loan Prepayment Calculator: Step by Step
Five simple inputs get you instant results, with optional advanced settings if your situation needs them. Here is what to enter and what each result means, with a real example so you know what to expect before you start.
Step 1: Enter your loan amount
Enter the original loan amount you took, not your current outstanding balance. The calculator amortizes from the start to work out your outstanding balance at any given month on its own. For a ₹30 lakh home loan, enter 3000000.
Step 2: Enter the annual interest rate
Enter the rate your lender charges, exactly as shown on your loan statement or sanction letter. For 8.5% per annum, enter 8.5. If your loan is floating rate and the rate has changed since disbursement, use the current rate.
Step 3: Enter the loan tenure in months
Enter your original sanctioned tenure in months. A 20 year home loan is 240 months. A 5 year personal loan is 60 months.
Step 4: Enter when you plan to prepay
Enter the month number at which you will make the prepayment. If your loan started in January 2023 and you plan to prepay in January 2025, that is month 24. Earlier is always better, so try a few different month values and see how much more you save by moving sooner.
Step 5: Enter the prepayment amount and choose your mode
Enter the lump sum you plan to pay, then choose whether to reduce tenure (loan closes earlier, EMI unchanged) or reduce EMI (tenure unchanged, lower monthly payment). Run the calculator once for each mode to compare both side by side.
Step 6: Add advanced options if you need them (optional)
Most borrowers make only one lump sum prepayment, so Steps 4 and 5 above are all you need. If your situation is more complex, open Advanced Prepayment Options below the form.
The Prepayment After and Prepayment Amount fields you filled in Steps 4 and 5 always count as your first prepayment. The advanced section does not ask for that amount again, it only lets you add to it.
Turn on "Add a recurring monthly extra payment" if you pay more than your EMI every month, for example an EMI of ₹25,000 with an extra ₹5,000 added on top each time, rather than one occasional lump sum.
Turn on "Add more one-time prepayments" if you plan to make more than one lump sum during the loan, for example ₹5 lakh in year 3 and another ₹5 lakh in year 10. Each row you add is a separate prepayment on top of the first one you already entered above. You can combine both advanced options together if you plan to do both.
Loan: ₹30,00,000 | Rate: 9% | Tenure: 240 months | Prepay ₹5,00,000 at Month 12 | Mode: Reduce Tenure- Your EMI: ₹26,992 per month
- Outstanding at Month 12: ₹29.44 lakh, after 12 regular EMIs
- Principal after prepayment: ₹24.44 lakh (₹29.44L minus ₹5L prepayment)
- New tenure after prepayment: 153 months
- Loan closes at: Month 165 (month 12 plus 153 remaining months)
- Tenure reduced by: 75 months, or 6 years 3 months
- Interest saved: ₹15.49 lakh, roughly 44.5% of the original total interest
Run the same inputs with Reduce EMI mode instead. Your EMI drops from ₹26,992 to ₹22,407, a reduction of ₹4,584. Tenure stays at 240 months, and interest saved drops to about ₹5.45 lakh, since the loan runs its full original length. Enter your own loan details for figures specific to your situation.
Prepayment Impact at Different Loan Amounts and Timing
The table below shows interest savings for a ₹50 lakh home loan at 8.5% over 20 years, with a ₹5 lakh prepayment made at different points in the tenure, using tenure reduction mode. These figures match what this calculator outputs for those exact inputs.
| Prepayment at Month | Outstanding at That Point | New Tenure | Months Saved | Interest Saved |
|---|---|---|---|---|
| Month 12 (Year 1) | ~₹49.0L | 192 months | 48 months | ~₹16.0L |
| Month 24 (Year 2) | ~₹47.9L | 195 months | 45 months | ~₹14.6L |
| Month 60 (Year 5) | ~₹44.1L | 204 months | 36 months | ~₹10.7L |
| Month 120 (Year 10) | ~₹35.0L | 216 months | 24 months | ~₹5.7L |
| Month 180 (Year 15) | ~₹21.1L | 224 months | 16 months | ~₹2.2L |
These figures are illustrative. Your actual savings depend on your exact outstanding balance at the time of prepayment, which varies with your original loan terms. Enter your specific loan details in the calculator above for precise figures. To find your current outstanding balance and EMI first, use our EMI Calculator.
Loan Prepayment Penalties in India: What to Check Before Prepaying
A prepayment penalty is a fee some lenders charge when you pay off part or all of your loan before the scheduled date. Lenders build this in because early repayment cuts short the interest income they priced into the loan when it was disbursed. Whether a penalty applies depends on the loan type and whether the rate is fixed or floating.
Under RBI rules, banks and housing finance companies cannot charge a prepayment penalty on floating rate home loans, for both partial prepayment and full foreclosure.
Fixed rate home loans may still carry a prepayment charge, typically 1 to 3% of the amount prepaid. Always confirm with your lender before prepaying a fixed rate loan.
Floating rate borrowers: prepay freely. Fixed rate borrowers: check whether the penalty offsets the interest you would save.
Personal loans typically carry a prepayment penalty of 2 to 5% of the outstanding amount. Some lenders also impose a lock in period of 6 to 12 months before prepayment is allowed at all.
Auto loans may or may not allow prepayment depending on the lender. Some NBFCs allow it freely but price it into a higher base rate.
Check your loan agreement or call your lender before prepaying a personal or auto loan, to confirm the exact charge that applies to you.
When Is the Best Time to Prepay Your Home Loan?
One rule matters more than any other: prepay as early in the tenure as you can. The table above shows why, the same ₹5 lakh prepayment saves roughly ₹16.0 lakh at month 12 but only about ₹2.2 lakh at month 180, on the same ₹50 lakh loan. Try changing the Prepayment After month in the calculator above and rerun it to see this play out on your own numbers.
For the full explanation of why timing matters this much, and when a later prepayment can still make sense, see our detailed guide on the best time to prepay a loan.
Home Loan Prepayment and Section 80C Tax Benefits
Prepaying the principal portion of a home loan can affect your Section 80C tax deduction, but only if you are on the old tax regime. This is worth checking before a large prepayment, especially if closing your loan early cuts short a deduction you were relying on. Use our Income Tax Calculator to check your liability under both regimes first.
For the full breakdown of how this tax angle weighs against prepaying versus investing your surplus instead, see our guide on whether you should prepay your loan or invest the surplus.
Frequently Asked Questions
