Loan Prepayment Calculator – Interest & Tenure Saved
See how one-time or yearly part-prepayments cut interest and shorten your loan. Calculated instantly in your browser.
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Interest saved
₹16,85,572
- Time saved
- 4 yrs 1 mo
- New tenure
- 15 yrs 11 mo
- Interest with prepayment
- ₹39,18,957
- Interest without prepayment
- ₹56,04,529
- EMI (unchanged)
- ₹44,186
- Loan closes in 15 yrs 11 mo instead of 20 yrs.
Year-by-year schedule with prepayment
| Year | Principal (EMI) | Prepayment | Interest | Closing balance |
|---|---|---|---|---|
| 1 | ₹96,537 | ₹5,00,000 | ₹4,33,689 | ₹44,03,463 |
| 2 | ₹1,50,879 | ₹0 | ₹3,79,347 | ₹42,52,584 |
| 3 | ₹1,64,624 | ₹0 | ₹3,65,603 | ₹40,87,960 |
| 4 | ₹1,79,620 | ₹0 | ₹3,50,606 | ₹39,08,340 |
| 5 | ₹1,95,983 | ₹0 | ₹3,34,244 | ₹37,12,358 |
| 6 | ₹2,13,836 | ₹0 | ₹3,16,391 | ₹34,98,522 |
| 7 | ₹2,33,315 | ₹0 | ₹2,96,911 | ₹32,65,206 |
| 8 | ₹2,54,569 | ₹0 | ₹2,75,657 | ₹30,10,637 |
| 9 | ₹2,77,760 | ₹0 | ₹2,52,467 | ₹27,32,877 |
| 10 | ₹3,03,062 | ₹0 | ₹2,27,164 | ₹24,29,815 |
How it's calculated
Interestₘ = Balanceₘ₋₁ × r
Balanceₘ = Balanceₘ₋₁ − (EMI − Interestₘ) − Prepaymentₘ
Reduce-EMI mode: EMI′ = Balance × r × (1 + r)ᵏ ÷ ((1 + r)ᵏ − 1), k = remaining months
The loan is simulated month by month twice: once as-is and once with your prepayments. The difference in total interest and months is your saving.
Assumptions
- Prepayment is applied right after the stated EMI is paid.
- Rate is fixed; no prepayment charges.
How to use this calculator
- Enter loan details. Set loan amount, rate and tenure.
- Add prepayments. Enter a one-time amount with the month, and/or a yearly amount.
- Choose mode. Pick reduce tenure or reduce EMI.
- Read savings. See interest saved, months saved and the new schedule.
Frequently asked questions
How does prepayment save interest?
A prepayment lowers your outstanding principal immediately. Since interest is charged on the outstanding balance every month, every future month's interest is smaller. The earlier you prepay, the more you save.
Reduce tenure or reduce EMI: which is better?
Keeping the EMI constant and reducing the tenure saves more total interest, because you keep repaying at the original pace. Reducing the EMI gives monthly cash-flow relief but saves less interest. If you can afford the EMI, choose reduce tenure.
Are there prepayment penalties?
RBI rules bar lenders from charging prepayment penalties on floating-rate loans for individual borrowers. Fixed-rate loans, car loans and personal loans may carry charges of about 2-5%, so check before prepaying. Charges are not modelled here.
When should I prepay a loan?
Generally the sooner the better, since early EMIs are mostly interest. But compare your loan rate to what you could earn after tax by investing the money, and keep an emergency fund.
How does the recurring annual prepayment work?
The amount is paid after every 12th EMI (12th, 24th month and so on) until the loan closes.
Does prepayment affect home loan tax benefits?
Lower outstanding principal means lower interest paid, which reduces the 24(b) interest deduction available in the old regime. The tax saved is usually far smaller than the interest saved.
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Results from FinanceChacha are estimates for planning and education, not financial, tax or legal advice.