Loan Prepayment Calculator

How to use Loan Prepayment Calculator

1. Pick whether you know your current EMI or the months remaining.
2. Enter the outstanding principal and the current interest rate.
3. Enter the part-payment amount and any prepayment charge percentage.
4. Compare Option A (same EMI, shorter loan) with Option B (lower EMI, same length).

What a prepayment actually does

Interest accrues on the outstanding balance each month. A part-prepayment lowers that balance straight away, so all later interest falls. After the payment you can leave the EMI alone, which ends the loan earlier, or recompute a smaller EMI for the original remaining term. Both options use the same cash; they just spend the benefit differently.

Option A finds the number of months n that clears the new balance with the unchanged EMI: n = -ln(1 - B x r / EMI) / ln(1 + r). Option B recomputes the EMI formula on the reduced balance over the original remaining months.

A verified worked example

Imagine an outstanding balance of 30,00,000 at an example rate of 9% with 180 months remaining, so the EMI is about 30,428. If you do nothing, the remaining interest is 24,77,039.55. Prepay 3,00,000 now.

Option A keeps the EMI and clears the loan in 147 months, 33 months sooner, with remaining interest of 17,59,703.39: a saving of 7,17,336.17. Option B keeps 180 months and drops the EMI to 27,385.20, with remaining interest of 22,29,335.60: a saving of 2,47,703.96. The shorter loan saves nearly three times as much interest.

• Prepay as early as you can; the benefit shrinks as the loan ages.
• Compare the saving to the charge, not just the headline interest figure.
• Keep an emergency fund before sending every spare rupee to the lender.
• If your loan rate is lower than what safe savings could earn after tax, partial prepayment may not be the best use of spare cash; weigh both before deciding.

Limits and privacy

The model assumes a fixed rate and equal monthly periods from today. Floating rate changes, missed payments, insurance bundled into the EMI and day-count conventions are not included. Estimates only, not financial advice. Example values in the fields are not current market rates; always use the figures in your lender's sanction letter.

Your balances and rates stay in your browser and are never transmitted.

Why use this loan prepayment calculator tool

• Two options, side by side. Reduce tenure or reduce EMI, each with its own interest saving.
• Charge-aware. Enter a prepayment charge and see the saving net of it.
• Works from an EMI or from months left. Use whichever figure is on your loan statement.
• Safe checks. Warns if the EMI cannot even cover interest or the prepayment closes the loan outright.

Frequently asked questions

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