Loan Prepayment Calculator
Pay a little extra each month and see how much interest and time you save.
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Why prepaying works
Interest is charged on the outstanding balance. Any extra money that goes to principal early shrinks the balance, so every later month charges less interest. That is why prepayment in the first third of a loan saves far more than the same amount near the end.
For floating-rate loans taken by individuals, lenders cannot charge prepayment penalties. Check your sanction letter for fixed-rate loans.
Frequently asked questions
Is it better to prepay or invest?
It depends on your loan rate, your risk appetite and tax position. A guaranteed saving at your loan rate is a sure return, while investments carry risk. Many people prepay costly loans first and invest the rest.
Should I reduce EMI or tenure when prepaying?
Reducing the tenure saves more interest, because you keep paying the same EMI. Reducing the EMI gives monthly relief but saves less.
Are there charges for prepaying a loan?
Floating-rate loans to individuals have no prepayment penalty under RBI rules. Personal loans and fixed-rate loans often have foreclosure charges of 2–5%.