Loan Prepayment Calculator
Cut the tenure or cut the EMI — the same money, and what each actually saves.
- Keep the EMI, finish 39 months early
- ₹10,50,707.84
- Keep the tenure, pay ₹34.47K instead of ₹39.39K
- ₹3,86,264.36
- Cutting the tenure is ahead by
- ₹6,64,443.48
Cutting the tenure always saves more interest than cutting the EMI for the same money, because the freed cash flow is applied earliest — the figures above will never contradict that. Cutting the EMI is a cash-flow decision, not an interest-saving one, and it is the right choice when the monthly outgo is the pressure. On charges: since the RBI's 2025 directions, a floating-rate loan to an individual for a non-business purpose carries no prepayment charge — any amount, no lock-in, whatever the source of the funds — for loans sanctioned or renewed from 1 January 2026. Fixed-rate loans may still be charged, and lenders often apply the prepayment to the tenure by default: if you want the EMI cut instead, you have to ask.
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Independent · No commissions · No fund-house data — how the numbers are computed
How it works
A lump sum against a running loan can be applied two ways. Keep the EMI where it is and the tenure shortens; keep the tenure and the EMI falls. Lenders usually apply it to the tenure by default, and if you want the EMI reduced instead you generally have to ask.
Cutting the tenure always saves more interest than cutting the EMI for the same money, because the freed cash flow is applied at the earliest possible point. That is arithmetic rather than opinion, and the figures here will never contradict it. Cutting the EMI is a cash-flow decision — the right one when the monthly outgo is the pressure — not an interest-saving one.
After prepaying L, the balance is B - L. Reduce tenure: solve n = -ln(1 - (B-L) x r / EMI) / ln(1+r) at the original EMI. Reduce EMI: recompute the EMI on (B - L) over the tenure that was left.Interest saved is measured for both against the same baseline — the interest still owed had nothing been prepaid — so the two are directly comparable rather than being computed on different bases.
Frequently asked questions
Is it better to reduce the tenure or the EMI?
Reducing the tenure saves more interest, always, for the same prepayment — the money comes off the balance earliest and so stops accruing interest for the longest. Reducing the EMI saves less but frees monthly cash flow, which is the right trade if the EMI is straining your budget. Choose on which pressure you are actually under, not on which sounds better.
Will my bank charge me for prepaying?
Since the RBI's Pre-payment Charges on Loans Directions, 2025, a floating-rate loan to an individual for a non-business purpose carries no prepayment charge at all — any amount, part or full, no lock-in, and irrespective of where the money came from — for loans sanctioned or renewed on or after 1 January 2026. Fixed-rate loans may still be charged, and those charges must be disclosed in the sanction letter and key facts statement.
When is prepaying not the right move?
When the money has a better use. Prepaying earns you a guaranteed return equal to your loan rate, which is excellent against a 13% personal loan and much less compelling against an 8.5% home loan if you have no emergency fund, or higher-rate debt outstanding elsewhere. Clear the most expensive borrowing first, and keep three to six months of expenses liquid before accelerating a cheap secured loan.
Is prepaying early in the tenure better than later?
Substantially, yes. Early in a reducing-balance loan almost all of each EMI is interest, so a prepayment then removes many years of future interest. The same amount paid in the final years removes very little, because by then most of each EMI is principal. If you are going to prepay at all, prepaying sooner is worth considerably more than prepaying more.