Loan Prepayment / Part-Payment Impact Calculator

The Loan Prepayment / Part-Payment Impact Calculator shows exactly how much interest you save — and how much time you shave off your loan — when you make a lump-sum extra payment toward your home, car, or personal loan. It compares your original repayment schedule against a new one that accounts for your prepayment.

It is built for anyone who has received a bonus, matured an investment, or simply saved up extra cash and is deciding whether to prepay their loan or invest that money elsewhere.

The calculator first computes your original EMI using the standard reducing-balance formula, then simulates the loan month by month. At the month you specify, it deducts your lump-sum prepayment from the outstanding balance, and then continues the schedule using one of two strategies you choose:

• Reduce Tenure: Your EMI stays exactly the same, but because the balance dropped, the loan finishes months or years earlier.
• Reduce EMI: Your original tenure stays the same, but a brand-new, lower EMI is recalculated on the reduced balance for the remaining months.

The difference between the total interest paid in the original schedule and the new schedule is your interest saved. As per RBI regulations, banks cannot charge foreclosure or prepayment penalties on floating-rate loans taken by individual borrowers for non-business purposes, so this saving is typically yours to keep in full.

Anjali has a home loan of ₹30,00,000 at 8.5% annual interest over a 20-year tenure, giving her an EMI of about ₹26,035. After 24 months of regular payments, she receives a bonus and makes a one-time prepayment of ₹5,00,000.

• If she chooses "Reduce Tenure" (keeping her EMI the same): she saves approximately ₹12,90,000 in total interest and finishes repaying her loan about 5 years and 8 months early.
• If she chooses "Reduce EMI" (keeping her original 20-year tenure): her EMI drops to roughly ₹21,507, and she still saves close to ₹4,78,000 in total interest.

The "Reduce Tenure" option almost always saves more total interest, while "Reduce EMI" is better if you need immediate monthly cash-flow relief.

• Data-Driven Decisions: See the real rupee impact of a prepayment before deciding to use a bonus, maturity payout, or savings toward your loan versus a new investment.
• Strategy Comparison: Instantly toggle between "Reduce Tenure" and "Reduce EMI" to see which fits your financial goals better.
• Downloadable Proof: Export the full month-by-month amortization schedule after prepayment as a CSV file for your records or to share with your bank.

Practical Tips:

• Prepaying early in the loan tenure saves far more interest than prepaying later, because a larger share of your EMI is still going toward interest in the early years.
• For floating-rate loans, RBI rules prohibit banks from charging you a prepayment penalty — always confirm this with your lender before assuming a "no-penalty" prepayment.
• If your loan's interest rate is higher than what you could reliably earn post-tax elsewhere (e.g., in an FD), prepayment is usually the mathematically better choice over investing that surplus.

Sources & References

• Reserve Bank of India — Circular on Foreclosure Charges/Pre-payment Penalty on Floating Rate Loans
• Standard reducing-balance amortization methodology used by Indian banks and NBFCs