Should I shorten the tenure or reduce the instalment?

Shortening the tenure saves considerably more interest, because the money stays out of the loan for the whole remaining period. Reducing the instalment gives you monthly breathing room instead. Run both and read the two totals.

How much does timing matter?

Enormously. The same part payment made in year two rather than year twelve can save several times as much, because early instalments are almost all interest and prepaying removes the compounding on that amount for every year that follows.

Is prepaying better than investing the money?

Compare the interest saved per rupee prepaid, which the tool prints, against what you could earn after tax elsewhere. Prepaying is a guaranteed, tax-free return equal to the loan rate, which is a higher bar than it first appears.

Will my lender charge me for prepaying?

Not on a floating-rate home loan to an individual, where regulation prohibits it. Fixed-rate loans, business loans and many personal loans can carry a charge, so check the agreement first.

Loan Prepayment Calculator

What a part payment saves, and whether to cut the tenure or the instalment.

Everything runs inside your browser. Your files never leave your device.

Result

The result appears here as you type.

Ask about Loan Prepayment Calculator

Questions about what this tool does, which option to pick, or what it can and cannot handle.

The question you type here is sent to an AI provider to be answered — your files and whatever you put in the tool above are not, and the assistant cannot see them. Answers are generated and can be wrong. The tool itself is not guessing: it runs deterministic code on your device.

About the Loan Prepayment Calculator

Paying extra into a loan saves interest, and the amount saved is far larger than most people assume — but only if the extra money arrives early. This runs the loan month by month, with and without the prepayment, and reports the difference.

Two things change the answer. The first is timing. Because early instalments are almost entirely interest, a part payment in year two removes many years of compounding on that amount, while the same payment in year fifteen removes only a few. The tool takes the month you make the payment as an input for exactly this reason: the same rupee is worth several times more at month twenty-four than at month one-eighty.

The second is what the lender does with the saving. Reducing the tenure keeps the instalment where it is and ends the loan sooner. Reducing the instalment keeps the end date and lowers the monthly outgo. The first saves substantially more, because the money stays out of the loan for the whole remaining term rather than being handed back to you month by month. Lenders often default to the second without asking, so it is worth stating your preference in writing.

The output also divides interest saved by the extra money put in, which is the cleanest way to compare prepaying against investing the same amount elsewhere. If a rupee prepaid saves you two rupees of interest over the term, an investment would have to beat that to be the better use of the money.

Check the loan agreement for a prepayment charge before acting. Floating-rate home loans to individuals cannot carry one; other loans can.

How to use it

1Enter the loan as it stands: amount, rate and the original tenure.
2Set the part payment and the month you would make it — timing changes the answer substantially.
3Add anything extra you would pay monthly on top of the instalment.
4Choose whether the saving shortens the loan or lowers the instalment, and compare both.

Questions

Should I shorten the tenure or reduce the instalment?: Shortening the tenure saves considerably more interest, because the money stays out of the loan for the whole remaining period. Reducing the instalment gives you monthly breathing room instead. Run both and read the two totals.
How much does timing matter?: Enormously. The same part payment made in year two rather than year twelve can save several times as much, because early instalments are almost all interest and prepaying removes the compounding on that amount for every year that follows.
Is prepaying better than investing the money?: Compare the interest saved per rupee prepaid, which the tool prints, against what you could earn after tax elsewhere. Prepaying is a guaranteed, tax-free return equal to the loan rate, which is a higher bar than it first appears.
Will my lender charge me for prepaying?: Not on a floating-rate home loan to an individual, where regulation prohibits it. Fixed-rate loans, business loans and many personal loans can carry a charge, so check the agreement first.