Loan prepayment calculator
What paying a lump sum, or a little extra each month, saves in interest and in months.
Free, with no sign-up Worked out in your browser The working shown, line by line
The answer
Check the lender’s prepayment charge before deciding. On a floating-rate loan to an individual there is usually none.
| Leaving it alone | |
| Balance | 20,00,000.00 |
| Instalments left | 148 months |
| Interest still to pay | 13,09,034.36 |
| Prepaying | |
| Lump sum | 2,00,000.00 |
| Balance after it | 18,00,000.00 |
| Extra each month | 0.00 |
| Instalments left | 123 months |
| Interest still to pay | 9,59,732.69 |
| The difference | |
| Interest saved | 3,49,301.67 |
| Term shortened by | 25 months |
- The instalment is left where it is, so the whole of the saving comes off the term.
Not statutory. The same reducing-balance arithmetic, run twice.
How it is worked out
The loan is run twice, a month at a time: once as it stands, and once after the lump sum comes off the balance and any extra is added to each instalment.
With the instalment left the same, a smaller balance is paid off sooner, so the saving shows up as fewer months and less interest. The difference between the two runs is what prepaying is worth.
Prepaying early in a loan saves the most, because the balance it removes would otherwise have carried interest for the longest.
Worked example: ₹2 lakh paid off a ₹20 lakh balance at 9%
Keeping the same instalment, the lump sum takes years off the loan and saves several times its own amount in interest. The answer shows exactly how much.
Questions
Should I reduce the EMI or the tenure after prepaying?
Keeping the instalment and shortening the tenure saves more interest, because the balance is cleared sooner. Reducing the instalment instead eases the monthly cash flow but saves less. This calculator keeps the instalment.
Is a lump sum or a monthly extra better?
A rupee paid earlier saves more than a rupee paid later, so a lump sum today beats the same total spread over the years. Fill in both fields to compare.
Is there a charge for prepaying?
It depends on the loan. Floating-rate loans to individuals usually carry no prepayment charge; fixed-rate and business loans often do. The agreement says.
The same answer, on every client, with the working paper written for you
KiyoTool works the same question across a client’s whole loan register, and has calculators for restructuring a loan, the effective rate once fees are counted, interest cover and debt service cover. It runs on Windows, offline, and your clients' books never leave the machine.