Loan Prepayment Calculator
This loan prepayment calculator shows exactly what happens when you make a one-time lump-sum payment toward your loan's principal — how much interest it saves, and how many months it cuts off the remaining tenure. Enter your loan details, the prepayment amount, and when you plan to make it, to see the real numbers rather than guessing whether prepaying is worth it.
The loan amount you originally borrowed (or your current outstanding balance, if the loan has already been running).
The reducing-balance rate on your loan.
The full tenure you originally agreed with your lender.
The one-time extra amount you plan to pay toward the principal, on top of your normal EMIs.
How far into the loan you make the prepayment. Earlier prepayments save far more interest, since more principal remains outstanding.
Interest saved
₹11,16,390
Money you simply never pay, because a smaller balance accrues less interest for the rest of the loan — e.g. ₹11.2 lakh saved from a ₹5 lakh prepayment made 3 years in.
How much sooner the loan is fully repaid if you keep paying the same EMI after prepaying, instead of reducing the EMI.
The loan's revised payoff time after the prepayment — compare this against the original tenure you entered above.
What you'll pay in interest after prepaying, versus the original total interest shown if you hadn't prepaid at all.
How to use this loan prepayment calculator
- 1Original loan amount: your starting principal, or your current outstanding balance if the loan has been running a while — either works, as long as the tenure and rate match what remains.
- 2Interest rate and tenure: enter the terms exactly as they appear on your loan statement.
- 3Lump-sum prepayment: the one-time extra amount you can pay — a bonus, maturity payout, or savings windfall.
- 4Prepayment timing: enter how many months into the loan you'll make the payment. The earlier you can prepay, the more interest it saves — this calculator makes that difference visible.
Understanding your results
Interest saved is the headline number — money you simply never pay, because a smaller balance accrues less interest for the rest of the loan. Time saved shows the tenure shortened by, assuming you keep paying the same EMI after prepaying (the standard, most interest-efficient approach) rather than reducing your EMI and keeping the original tenure. New loan tenure and new total interest give you the full revised picture to compare directly against your current loan statement.
The formula
Simulated month-by-month: Balanceₙ = Balanceₙ₋₁×(1+r) − EMI, minus the lump sum in the prepayment monthUnlike a plain EMI, a prepayment's effect can't be captured in a single closed-form formula — the calculator simulates the loan month by month at the original EMI, subtracts the lump sum in the chosen month, and continues until the balance reaches zero, counting the months and interest along the way. This is compared against the original loan's schedule (no prepayment) to compute the savings. The same simulation approach is what your lender's system does internally when you request a prepayment statement.
A worked example
A ₹25,00,000 loan at 8.5% over 20 years, with a ₹5,00,000 prepayment made after 36 months: the loan finishes about 74 months (over 6 years) early, and total interest falls by roughly ₹11,16,390. Make the exact same ₹5,00,000 prepayment later — after 60 months instead of 36 — and the saving drops to about ₹9,29,633 with only 64 months cut off the tenure. The lesson is direct: an identical prepayment made two years earlier saves nearly ₹1.9 lakh more, simply because it removes principal from a larger, longer-accruing balance.
Notes for the UK, US and India
In India, RBI rules bar prepayment penalties on floating-rate home loans taken by individuals, making early prepayment almost always financially smart if you have spare cash and no higher-return use for it; fixed-rate loans, car loans and personal loans may still carry a 2–5% foreclosure fee, so check your agreement before prepaying those. In the US, most conventional mortgages have no prepayment penalty, though some non-conforming loans do — read the note. In the UK, fixed-rate mortgages often charge an Early Repayment Charge (ERC), typically 1–5% of the amount overpaid beyond an annual allowance (commonly 10% of the balance) — check your specific deal's overpayment allowance before making a large one-off payment.
Frequently asked questions
Should I prepay my loan or invest the money instead?+
Compare your loan's interest rate against what you can reliably earn after tax elsewhere. Prepaying a 9% loan is a guaranteed, tax-free 9% return; if your investments reliably earn more than that after tax, investing wins — otherwise prepaying is the safer, often better choice.
Is it better to reduce my EMI or reduce my tenure after prepaying?+
Reducing the tenure while keeping the same EMI saves far more total interest, because the loan closes sooner and stops accruing interest altogether. Reducing the EMI instead eases monthly cash flow but the loan runs its full original length, accruing more interest along the way.
Does prepaying early always save more than prepaying later?+
Yes — for an identical prepayment amount, prepaying earlier always saves more interest, because more principal is outstanding and accruing interest at that point. The calculator above lets you compare exact timings for your own numbers.
Are there penalties for prepaying a loan?+
It depends on the loan type and country. Indian floating-rate home loans for individuals have none by regulation; UK fixed-rate mortgages often charge an Early Repayment Charge beyond an annual overpayment allowance; check your specific loan agreement before prepaying.
What is the difference between prepayment and overpayment?+
Prepayment (modelled here) is a one-time lump sum paid at a specific point in the loan. Overpayment is a smaller extra amount added to every regular payment from the start — see our mortgage overpayment calculator for that scenario.