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Loan Prepayment Calculator
Find out how much money and time you can save by making a partial payment (prepayment) on your existing loan. This tool helps you understand the benefits of paying off your loan faster.
About This Tool
Making a prepayment on your loan means paying a lump sum amount that is more than your regular EMI. This can significantly reduce your loan's principal amount, which in turn lowers your total interest outgo and can shorten the loan tenure. This calculator quantifies those savings for you.
How to Use This Tool
- Enter your original total loan amount.
- Input the annual interest rate for your loan.
- Provide the original tenure of the loan in years.
- Enter the lump sum amount you wish to prepay.
- Click "Calculate Savings" to see how your EMI changes and how much interest you save.
Frequently Asked Questions
Are there any prepayment penalties?+
As per RBI guidelines, there are no prepayment penalties on floating rate home loans. However, fixed-rate loans and other types of loans (like personal or car loans) may have prepayment charges. It's best to check with your lender before making a prepayment.
Should I reduce my EMI or my tenure after prepayment?+
Most lenders give you the option to either reduce your monthly EMI or shorten the loan tenure. Reducing the tenure is almost always the better option as it leads to greater overall interest savings. Reducing the EMI can provide more monthly cash flow if that is your priority.
Is it always a good idea to prepay a loan?+
While prepaying a loan saves you interest, you should consider the opportunity cost. If you have investment opportunities that can generate higher returns than the interest rate on your loan, it might be more beneficial to invest the money instead of prepaying the loan.