Loans
Link copied!
Prepayment Savings Calculator
Find the interest you'll save by paying off a loan ahead of schedule. Adjust any input below and your results update instantly.
Understanding loan prepayment
The concept, the motivation, and what to watch out for.
What happens when you prepay a loan?
A prepayment is a lump sum you pay toward your principal, on top of your regular EMIs. It immediately reduces what you owe — but you get to choose how that reduction plays out.
You can keep your EMI the same and finish the loan sooner (reducing tenure), or keep your original tenure and pay a smaller EMI from then on (reducing EMI). The two options use the same prepayment but save very different amounts of interest.
Reducing tenure almost always saves more
Finishing your loan sooner, rather than just lowering your monthly payment, cuts off interest accrual entirely for the months you skip — the larger saving of the two options.
It's the same EMI math, solved for a different variable
Reducing tenure inverts the EMI formula to solve for months; reducing EMI applies the standard formula to a smaller principal over the same months.
How this calculator helps
Enter your outstanding balance, rate, remaining tenure, and prepayment amount — compare both options side by side and see exactly how much interest each one saves.
Calculate your prepayment savings
Fill in the starred fields on the left — your results update instantly on the right.
Your details
≈ ₹20.00 L
e.g. ₹20,00,000 outstanding
e.g. 9% on your loan
e.g. 15 years remaining
≈ ₹2.00 L
e.g. ₹2,00,000 lump sum
These are example numbers. Edit any input on the left to see your own.
Prepaying now saves you up to
₹4.78 L
by reducing your tenure
New principal
₹18.00 L
Time saved
2y 9mo
Two ways to use your prepayment
Both use the same ₹2.00 L prepayment — reducing tenure always saves at least as much interest.
RECOMMENDED
Keep EMI, reduce tenure
Same ₹20,285/month, finish sooner
12y 3mo
New payoff time (2y 9mo sooner)
₹4.78 L interest saved
ALTERNATIVE
Keep tenure, reduce EMI
Same 15y, smaller monthly outgo
₹18,257/mo
Down from ₹20,285/mo
₹1.65 L interest saved
Outstanding balance: with vs. without prepayment
With prepaymentWithout prepayment
Shows Option A (reduce tenure) — notice the balance hits zero well before the original schedule.
Year-by-year comparison
Based on Option A — keeping your EMI unchanged.
YearBalance with prepaymentBalance without prepaymentStatus
2₹16.22 L₹18.62 L
10% repaid
10% of new principal repaid
4₹14.10 L₹16.96 L
22% repaid
22% of new principal repaid
6₹11.55 L₹14.98 L
36% repaid
36% of new principal repaid
8₹8.51 L₹12.61 L
53% repaid
53% of new principal repaid
10₹4.87 L₹9.77 L
73% repaid
73% of new principal repaid
12₹51,342₹6.38 L
97% repaid
97% of new principal repaid
14₹0₹2.32 L
Loan paid off
Fully repaid
15₹0₹0
Loan paid off
Fully repaid
Compare scenarios
See how a bigger prepayment moves your interest savings.
Your plan
₹2.00 L prepaid
₹4.78 L
Interest saved (Option A)
Baseline
Prepay +50%
₹3.00 L prepaid
₹6.63 L
Interest saved (Option A)
+₹1.85 L
Prepay 2x
₹4.00 L prepaid
₹8.20 L
Interest saved (Option A)
+₹3.42 L
Worked example, using your numbers
A step-by-step walkthrough of how your prepayment turns into interest saved.
Step 1 · New principal
After a ₹2.00 L prepayment on your ₹20.00 L balance, you owe
₹18.00 L
Step 2 · Reduce tenure
Keeping your ₹20,285 EMI the same, your loan now finishes in
12y 3mo
Step 3 · Interest saved
Compared to your original schedule, that saves
₹4.78 L
✓
Prepaying ₹2.00 L saves ₹4.78 L by reducing your tenure — or ₹1.65 Lif you’d rather keep your tenure and reduce your EMI instead.
Personalised insights
What your numbers reveal, and what changing them would do.
Prepaying ₹2.00 L now reduces your loan to ₹18.00 L
Your outstanding balance drops immediately from ₹20.00 L — how that reduction plays out depends on which option you choose below.
Keeping your EMI the same, you'd finish 2y 9mo sooner
That saves ₹4.78 L in interest — the larger of your two options, since it cuts off interest accrual for the months you skip entirely.
Keeping your tenure the same instead, your EMI would drop to ₹18,257
That saves ₹1.65 L in interest — less than Option A, since you're still paying for the full original 15 years.
Prepaying 2x instead would save ₹8.20 L
Doubling your prepayment to ₹4.00 L increases your interest savings from ₹4.78 L to ₹8.20 L.
How this is calculated
Every step of the math behind your result, shown in the open.
Your loan amount after prepayment
P = outstanding balance, X = prepayment amount, P' = new principal
Your prepayment (X) is subtracted directly from your outstanding balance (P) — the reduction applies immediately, before any further interest accrues.
Example: ₹20.00 L − ₹2.00 L → ₹18.00 L new principal
Option A — solving for your new tenure
P' = new principal, r_m = monthly rate, EMI = your unchanged monthly instalment, n' = new number of months
Keeping your EMI fixed, this solves the EMI formula in reverse for the number of months (n') your smaller principal (P') now takes to repay.
Example: ₹18.00 L at ₹20,285/mo → 12y 3mo to repay (was 15y)
Option B — solving for your new EMI
P' = new principal, r_m = monthly rate, n = original remaining months, EMI' = new monthly instalment
Keeping your original tenure (n), this applies the standard EMI formula to your reduced principal (P') to find the smaller instalment (EMI') it now supports.
Example: ₹18.00 L over 15y at 0.750%/month → ₹18,257 new EMI
Assumptions
- The prepayment is applied as a single lump sum, immediately, before any further interest accrues.
- The interest rate stays fixed for the entire remaining tenure under both options.
- No prepayment processing fees or penalties are included.
- Figures are indicative and pre-tax — not financial advice.
Did you know?
A few facts behind prepaying a loan.
A > B
Reducing tenure beats reducing EMI, almost always
For the same prepayment amount, finishing your loan sooner saves more total interest than simply paying a smaller EMI for the same remaining years.
Early
Prepaying early in the loan saves the most
A prepayment made in year 2 of a 20-year loan saves far more interest than the same prepayment made in year 18, since it removes interest-bearing balance for many more years.
RBI
Floating-rate loans usually carry no prepayment penalty
RBI rules generally prevent lenders from charging individual borrowers a penalty for prepaying or foreclosing a floating-rate loan.
Habit
Small, regular prepayments add up
You don't need one large lump sum — consistently prepaying smaller amounts whenever you can compounds into substantial interest savings over a loan's lifetime.
Frequently asked questions
Straight answers to the questions we hear most about prepayment.
What's the difference between reducing tenure and reducing EMI?
Reducing tenure keeps your EMI the same but finishes the loan sooner. Reducing EMI keeps your original payoff date but lowers your monthly payment from now on. Both use the same prepayment amount.
Which option saves more interest?
Reducing tenure almost always saves more total interest, since it cuts off interest accrual for the months you skip entirely, rather than just lowering the rate at which it accrues each month.
Is there a penalty for prepaying my loan?
For individual borrowers, RBI rules generally prohibit prepayment penalties on floating-rate loans. Fixed-rate loans and some other loan types may still carry a penalty — check your loan agreement.
Can I make multiple prepayments over time instead of one lump sum?
Yes, and many borrowers do. This calculator models a single lump-sum prepayment; making smaller, regular prepayments would compound similarly, just spread across multiple recalculations.
Does this include any prepayment processing fees?
No, this calculator estimates only the interest impact of the prepayment itself. Some lenders charge a small processing fee for prepayments — check with your lender.
Is this financial advice?
No. This tool provides indicative estimates based on your assumptions. Consult your lender or a certified financial advisor before making borrowing decisions.
Related calculators
Other tools worth checking as you plan your loan.
ELoans
EMI Calculator
Calculate the monthly instalment for any loan amount, rate and tenure.
Try it
HLoans
Home Loan Calculator
Estimate your EMI, total interest and payout for a home loan.
Try it
BLoans
Balance Transfer Calculator
See how much you could save by switching your loan to another lender.
Try it
PLoans
Personal Loan Calculator
Compare EMI and total interest across different tenures and rates.
Try it
Learn more
Articles to go deeper on the ideas behind this calculator.
Strategy
Reducing tenure vs reducing EMI on a prepayment
Two ways to use a prepayment, and which one saves more interest.
5 min read
Fundamentals
How EMI is calculated, step by step
The formula behind every EMI, and why early instalments are mostly interest.
5 min read
Strategy
How often should you prepay your loan?
Weighing a prepayment habit against other uses for the same money.
5 min read