Prepayment
Loan Prepayment Calculator
Estimate how a lump-sum prepayment or extra monthly payment can reduce interest, shorten the loan, or lower EMI. Charges and floating-rate resets are not included.
What this calculator does
After each EMI, interest is charged only on the remaining principal. Paying extra — once, or every month — brings that principal down sooner, so later months cost less interest. You can keep the EMI and finish earlier, or recast the EMI for the months still left after a lump sum.
How prepayment is modelled
Interest saved ≈ original total interest − interest after the lump sum / extra EMI
Each month, interest is charged on the outstanding principal. A lump sum or extra EMI reduces that principal sooner, so later months accrue less interest. Reducing tenure keeps the original EMI and ends the loan earlier. Reducing EMI recalculates the instalment for the months still remaining after the lump sum.
Example
On a ₹50,00,000 home loan at an assumed 8.5% for 20 years, a ₹5,00,000 lump sum after 12 EMIs, with tenure reduced, typically cuts both remaining months and total interest versus paying the original schedule to the end. The exact saving depends on when you prepay.
Important considerations
Emergency savings should usually come before aggressive prepayment. Compare the interest you would save with what the same money could earn elsewhere after tax — this calculator does not make that comparison for you.
Frequently asked questions
Should I reduce tenure or reduce EMI?
Reducing tenure keeps the original EMI and usually saves more interest. Reducing EMI lowers the monthly outgo and keeps the remaining months. Neither choice is universally better; it depends on cash flow.
Are foreclosure or prepayment charges included?
No. Some lenders charge a fee, especially on fixed-rate loans. Subtract any charge from the interest saved before you decide.
Can I model only an extra EMI with no lump sum?
Yes. Set the lump sum to 0, choose “reduce tenure”, and enter an extra monthly amount. You must enter at least one of the two.
Does this work for floating-rate loans?
Only as a snapshot at the rate you enter. If the rate changes, the saving will differ. Re-run the calculator with a new assumed rate.
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SmartCalculators provides educational calculators and estimates. Results are for informational purposes only and should not be considered financial, tax, investment, legal or professional advice.