Loan Prepayment Calculator
Find interest savings and tenure reduction by prepaying lumpsum amounts or monthly top-ups on loans.
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How Extra Loan Payments Cut Interest and Tenure
A loan prepayment is money paid over and above your scheduled EMI, applied directly to the principal. Because reducing balance loans charge interest on the outstanding balance, every rupee of principal repaid early removes not just that rupee but all the future interest it would have attracted. That makes prepayment most powerful on long tenures: the earlier in the loan you start, the more you save. Most floating-rate home loans in India carry no prepayment penalty, so nothing eats into the saving.
The effect stacks up quickly. On a ₹50 lakh loan at 8.5% for 20 years, the EMI is about ₹43,400 and the interest bill totals roughly ₹54 lakh. Adding just ₹5,000 a month closes the loan in about 15.5 years, around four years early, and cuts total interest by roughly ₹14 lakh. You can check the no-prepayment baseline in the EMI calculator, and the full decision framework, including when investing the surplus beats prepaying, is in loan prepayment vs investing.
Think of prepayment as a certain, risk-free saving equal to your loan's interest rate: clearing an 8.5% loan is economically similar to a guaranteed 8.5% return, a tough benchmark for a volatile market-linked CAGR to beat consistently. Because inflation steadily reduces the real value of your future EMIs, a mix of part-prepayment and continued investing is a balance many borrowers strike. The side-by-side comparison lays out the numbers by loan type.
Popular Loan Prepayment Calculations
Click on any of the popular search scenarios below to load the calculator with pre-configured values:
- ₹50 lakh loan at 8.5% for 20 years with ₹5,000 extra paid every month
- ₹50 lakh loan at 8.5% for 20 years with ₹10,000 extra paid every month
- ₹30 lakh loan at 9% for 15 years with ₹3,000 extra paid every month
- ₹1 crore loan at 8.5% for 20 years with ₹20,000 extra paid every month
- ₹25 lakh loan at 9.5% for 15 years with ₹2,000 extra paid every month
Frequently Asked Questions
Formula & Mathematical Approach
Simulates how extra payments accelerate loan payoff and save interest.
Show Plain Text / Excel Formula
Interest (Month m) = Outstanding Principal * (Annual Rate / 12 / 100) Principal Paid = EMI + Prepayment - Interest
Key Assumptions
- Prepayments are applied immediately to reduce the outstanding principal.
- No prepayment penalties or service fees.