How Loan Prepayment Works
Estimate how much interest a part prepayment can save and compare it with investing the same amount. The calculator uses the visible inputs, applies the formula below, and rounds rupee outputs to whole numbers so the result is easy to read on mobile.
Formula
Interest saved = interest without prepayment - interest after prepayment
Net benefit = interest saved - estimated gain from investing the same prepayment
Tenure reduction = original remaining months - new closure monthExample Calculation
India-Specific Assumptions
- Loan and investment results use standard public formulas used by Indian banks and mutual-fund calculators.
- Rates are editable reference assumptions, not offers from a bank or AMC.
- All rupee results are rounded to whole rupees for readability.
- Inputs are treated as estimates; actual bank, employer, university, insurer, or tax-office calculations may differ.
- The calculator uses Indian formats, slab concepts, and common FY 2025-26 assumptions where relevant.
Common questions
Many lenders let you choose between lower EMI and shorter tenure. Keeping EMI unchanged usually creates larger interest savings because the loan closes faster.
For floating-rate home loans taken by individuals, RBI-linked rules generally prevent banks and housing finance companies from charging foreclosure or prepayment penalties. Fixed-rate loans and non-individual borrowers can differ, so check the sanction letter.
They often can. Personal loans may have lock-ins, part-payment limits, or foreclosure charges, so include the actual penalty manually when comparing offers.
Prepayment gives a risk-free interest saving equal to the loan rate, while investing can earn more or less depending on market returns and risk. The calculator shows the gap so you can choose deliberately.
It is the number of months from now before you make the lump-sum prepayment. Use 0 if the prepayment happens immediately.
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Request a calculator →Disclaimer: This calculator is for general informational and educational purposes only. It is not financial, tax, legal, academic, insurance, or professional advice. Verify important decisions with the relevant official source, employer, bank, university, insurer, or adviser.
Last updated: April 2026