Loan Prepayment Calculator
Calculate how much interest you can save and how many EMIs you can reduce by prepaying your loan.
The Power of Prepayment
Making even a small extra payment towards your loan principal each month can have a massive impact. This is because the interest for the next month is calculated on a smaller outstanding balance. Over many years, this effect compounds, saving you lakhs in interest and shortening your loan tenure significantly.
Frequently Asked Questions (FAQs)
What is loan prepayment?
Loan prepayment is the act of paying off a part of your loan principal amount earlier than the scheduled EMI payments. This extra payment goes directly towards reducing the principal, which in turn reduces the total interest you pay over the loan's life.
Is it a good idea to prepay a loan?
Yes, in most cases, prepaying a loan is an excellent financial decision. It helps you save a significant amount of money on interest payments and allows you to become debt-free much sooner. The interest saved is effectively a "guaranteed, tax-free return" on your extra payment.
Things to Check Before Prepaying
Before you start making prepayments, check two things with your lender:
- Prepayment Penalties: While floating-rate home loans in India usually have no prepayment penalties, fixed-rate loans or personal loans might. Check if the penalty negates the interest savings.
- Prepayment Method: Some lenders only accept prepayments at specific times or in specific minimum amounts. Confirm the process. This calculator assumes you can add a fixed amount to your EMI each month.
Want to Lower Your EMI?
Prepayment is one option. Another is refinancing your loan at a lower interest rate. Talk to our partners to see if you can save.