Power Calculators

💰 Loan Prepayment Calculator: Reduce EMI or Tenure

Got a lump sum to put into your loan? See how much interest it saves if you keep the EMI and shorten the loan, or keep the end date and lower the EMI.

By the Power Calculators team Updated

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How many EMIs you will have paid when you make the prepayment.

Fill in the details and click Calculate to see your results.

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📘 About the Loan Prepayment Calculator

After a part prepayment, banks let you choose: keep the same EMI and finish earlier (reduce tenure), or keep the same end date and pay a lower EMI (reduce EMI). This calculator works out both, side by side.

Reducing the tenure almost always saves more interest. Reducing the EMI makes sense if your budget is tight or you want lower fixed outgoings.

✏️ Worked examples

₹30 lakh, 8.5%, 20 yrs, ₹5 lakh after 36 EMIs

You enter
Loan Amount₹3,000,000
Interest Rate8.5 % p.a.
Loan Tenure20 yrs
Prepayment Amount₹500,000
Paid After36 EMIs
You get
Reduce tenure: interest saved₹11,73,423
Reduce tenure: loan closes in14 yrs 8 mo (5 yrs 4 mo sooner), EMI stays ₹26,035
Reduce EMI: interest saved₹4,46,858
Reduce EMI: new EMI₹21,393 (was ₹26,035), same end date
Balance before prepayment₹28,04,580
Better option for saving interestReduce tenure (by ₹7,26,565)

14 yrs 8 mo (5 yrs 4 mo sooner), EMI stays ₹26,035; ₹21,393 (was ₹26,035), same end date.

Try this example →

₹50 lakh, 8.75%, 25 yrs, ₹10 lakh after 60 EMIs

You enter
Loan Amount₹5,000,000
Interest Rate8.75 % p.a.
Loan Tenure25 yrs
Prepayment Amount₹1,000,000
Paid After60 EMIs
You get
Reduce tenure: interest saved₹29,62,165
Reduce tenure: loan closes in17 yrs (8 yrs sooner), EMI stays ₹41,107
Reduce EMI: interest saved₹11,20,906
Reduce EMI: new EMI₹32,270 (was ₹41,107), same end date
Balance before prepayment₹46,51,656
Better option for saving interestReduce tenure (by ₹18,41,259)

17 yrs (8 yrs sooner), EMI stays ₹41,107; ₹32,270 (was ₹41,107), same end date.

Try this example →

🧭 How to use this calculator

What you enter

  • Loan Amount (₹)
  • Interest Rate (% p.a.)
  • Loan Tenure (yrs)
  • Prepayment Amount (₹)
  • Paid After (EMIs)How many EMIs you will have paid when you make the prepayment.

What you get

  • Reduce tenure: interest saved
  • Reduce tenure: loan closes in
  • Reduce EMI: interest saved
  • Reduce EMI: new EMI
  • Balance before prepayment
  • Better option for saving interest

💡 Prepay or invest?

  • Prepaying a loan gives a guaranteed, tax-free 'return' equal to its interest rate (8.5% here). An investment has to beat that after tax and risk.
  • Keep an emergency fund of 3–6 months' expenses before prepaying.
  • Old tax regime: home loan interest up to ₹2 lakh a year (Section 24(b)) and principal under Section 80C are deductible, which lowers the effective rate. The new regime gives no deduction for a self-occupied home.
  • Floating-rate home loans to individuals carry no prepayment or foreclosure charge (RBI rules). Fixed-rate, personal and car loans often charge 2–5%.

❓ Frequently asked questions

Is it better to reduce EMI or tenure after prepayment?

Reducing the tenure saves much more interest. On a ₹30 lakh loan, a ₹5 lakh prepayment after 3 years saves about ₹11.7 lakh by reducing tenure, versus about ₹4.5 lakh by reducing EMI.

When is the best time to prepay a home loan?

As early as possible. In the first years most of each EMI is interest, so principal reduced early saves interest for the longest time.

Is there a minimum prepayment?

Many banks ask for at least one or two EMIs per part-payment. Check your lender's rules.

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