Loan Prepayment Calculator

Compare using a lump-sum prepayment to reduce EMI versus reduce tenure and see interest saved.

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Formula, example and assumptions
EMI after reducing payment₹30,071.47

Original loan

Indian rupees
%

Planned prepayment

Indian rupees

Your result

Local calculation
EMI after reducing payment₹30,071.47

A one-time prepayment can lower the monthly EMI or shorten repayment while keeping the original EMI. Interest savings compare each option with the original loan over its remaining life.

Original loan tenure
20 years
Prepayment timing
36 months
Lump-sum prepayment
₹5,00,000
See how this is calculated

Result breakdown

Interest saved by reducing EMI
₹4,46,857.94 About ₹4.47 lakh
Months saved by reducing tenure
50 months
Interest saved by reducing tenure
₹12,61,028.01 About ₹12.61 lakh

Comparison

Original interest₹43,31,103.04
Reduce EMI interest₹38,84,245.10
Reduce tenure interest₹30,70,075.03

Outstanding balance before prepayment: ₹37,39,440.34.

Check the inputs and method

These are your current inputs, not the worked example further down the page.

Original loan amount
₹40,00,000
Annual interest rate (%)
8.5 %
Original loan tenure
20 years
Prepayment timing
36 months
Lump-sum prepayment
₹5,00,000

Method

Let P be initial principal, r = annual percentage ÷ 1,200, n the original months and k payments already made. Original EMI E = Pr ÷ [1 − (1 + r)^(−n)], or P ÷ n at 0%. Balance B = P(1 + r)^k − E[(1 + r)^k − 1] ÷ r, or P − kE at 0%. Subtract prepayment L. Lower-EMI option applies the same payment formula to B − L for n − k months. Shorter-tenure option keeps E, adds monthly interest to the remaining balance and pays until zero, with a smaller final payment. Compare total interest including interest paid before prepayment.

Read the worked example and assumptions

How this calculation works

A lump-sum prepayment reduces the outstanding loan principal after your scheduled instalments. This comparison uses the same prepayment for two choices: lower the monthly EMI while keeping the original end date, or keep paying the original EMI and finish earlier. Compare the monthly relief against the interest saved and check the lender’s treatment of part payments before choosing a plan.

Let P be initial principal, r = annual percentage ÷ 1,200, n the original months and k payments already made. Original EMI E = Pr ÷ [1 − (1 + r)^(−n)], or P ÷ n at 0%. Balance B = P(1 + r)^k − E[(1 + r)^k − 1] ÷ r, or P − kE at 0%. Subtract prepayment L. Lower-EMI option applies the same payment formula to B − L for n − k months. Shorter-tenure option keeps E, adds monthly interest to the remaining balance and pays until zero, with a smaller final payment. Compare total interest including interest paid before prepayment.

Worked example

This example uses illustrative inputs. Your current result is shown above.

Start with a ₹40,00,000 loan at 8.5% annual reducing-balance interest for 20 years. Its EMI is about ₹34,712.93. After 36 monthly payments, the balance is approximately ₹37,39,440.34. A ₹5,00,000 prepayment reduces it to ₹32,39,440.34. Keeping the original end date lowers the remaining EMI to about ₹30,071.47; keeping the original EMI shortens the remaining term from 204 to about 154 months, saving 50 months.

Assumptions and limits

  • This comparison uses a monthly reducing-balance loan with a constant annual rate.
  • The prepayment happens immediately after the selected scheduled monthly instalment; the amount cannot exceed the outstanding balance.
  • Prepayment charges, switching fees and tax effects are excluded. Check the loan agreement and applicable lender rules before making a payment.

Questions people ask

Does reducing EMI or reducing tenure save more interest?

For the same constant-rate loan and prepayment, continuing the higher original EMI normally repays principal faster and saves more interest. A lower EMI instead reduces the immediate monthly obligation. The two result columns show that trade-off.

What does prepayment timing mean?

It is the number of scheduled monthly payments already made before the lump sum is applied. A timing of 36 months means the extra payment is made just after instalment 36, not at the start of the loan.

Can I enter the full original loan amount as a prepayment?

Use the balance still outstanding at that time. Scheduled payments have already repaid some principal, so a later prepayment cannot be greater than the remaining balance. Paying that remaining balance closes the loan in the model.

Are bank prepayment charges included?

No. Eligibility for charges depends on the agreement and applicable rules, including the loan’s rate type and purpose. Add any permitted charges to your real-world comparison before deciding whether the saving is worthwhile.

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